Leading exploration, production companies move to green energy

Six Pakistani oil, and gas companies sign MoU for joint ventures; 15% of global energy-related greenhouse gas emissions come from oil and gas exploration
Leading oil and gas exploration companies in Pakistan have joined hands to
explore and pursue green hydrogen prospects, says the Petroleum Division of Pakistan’s Ministry of Energy.
These exploration and production companies include Oil & Gas Development Company Limited, Pak-Arab Refinery Limited, Pakistan Petroleum Limited, Mari Petroleum Company Limited, and Government Holdings (Private) Limited.
It merits mentioning that oil and gas are often painted as the dirtiest sector within the energy industry, but major companies around the world have begun to invest in renewable technologies in a bid to clean up the economy.
Of the six “super-majors” – BP, Shell, Chevron, Total, Eni, and Exxon – many of them have pumped billions into clean energy projects, although question marks remain over whether they are doing enough.
Despite the growth in renewables, “big oil” only spent 1% of its combined budget on green energy schemes in 2018.
The Petroleum Division says these companies in Pakistan have signed a memorandum of understanding (MoU) for joint ventures in the future.
The MoU will be initially effective for two years from the date of signing and it will engage consultants and advisors to explore the opportunities.
Under the MoU, the companies will also establish a joint fund to raise equity for joint ventures and green energy initiatives, said the statement.
Additional Secretary of the Petroleum Division Muhammad Mahmood, who witnessed the event, said that the collaboration could drive the energy transition towards a more sustainable future, leveraging each company’s expertise and resources.
“This collaboration is a significant step towards building a more sustainable future for Pakistan and beyond,” added the official.
On the occasion, Managing Director of the Oil & Gas Development Company Limited Ahmed Hayat Lak said, “we are confident that by leveraging our collective expertise and resources, we can accelerate the energy transition and create a greener, cleaner, and more prosperous future.”
The IEA’s Oil and Gas Industry in Energy Transitions report says while some oil and gas companies have taken steps to support efforts to combat climate change, the industry as a whole could play a much more significant role through its engineering capabilities, financial resources, and project-management expertise.
“No energy company will be unaffected by clean energy transitions,” said Dr. Fatih Birol. “Every part of the industry needs to consider how to respond. Doing nothing is simply not an option.”
The landscape of the oil and gas industry is diverse, meaning there is no single strategic response but a variety of approaches depending on each company’s circumstances.
“The first immediate task for all parts of the industry is reducing the environmental footprint of their own operations,” Dr. Birol said. “As of today, around 15% of global energy-related greenhouse gas emissions come from the process of getting oil and gas out of the ground and to consumers. A large part of these emissions can be brought down relatively quickly and easily.”
Reducing methane leaks into the atmosphere is the single most important and cost-effective way for the industry to bring down these emissions. But there are ample other opportunities to lower the emissions intensity of delivered oil and gas by eliminating routine flaring and integrating renewables and low-carbon electricity into new upstream and LNG developments.
“Also, with their extensive know-how and deep pockets, oil and gas companies can play a crucial role in accelerating deployment of key renewable options such as offshore wind, while also enabling some key capital-intensive clean energy technologies – such as carbon capture, utilisation, storage, and hydrogen – to reach maturity,” Dr. Birol added. “Without the industry’s input, these technologies may simply not achieve the scale needed for them to move the dial on emissions.”
Some oil and gas companies are diversifying their energy operations to include renewables and other low-carbon technologies. However, average investment by oil and gas companies in non-core areas has so far been limited to around 1% of total capital spending, with the largest outlays going to solar PV and wind. Some oil and gas companies have also diversified by acquiring existing non-core businesses – for example in electricity distribution, electric-vehicle charging, and batteries – while stepping up research and development activity. But overall, there are few signs of the large-scale change in capital allocation needed to put the world on a more sustainable path.
An essential task is to step up investment in fuels – such as hydrogen, biomethane, and advanced biofuels – that can deliver the energy system benefits of oil and gas without net carbon emissions. Within 10 years, these low-carbon fuels would need to account for around 15% of overall investment in fuel supply if the world is to get on course to tackle climate change. In the absence of low-carbon fuels, transitions become much harder and more expensive.