Priorities toward Sustainability
The GCC region is no different from any the other region in the world – Decarbonisation and pushing towards net-zero are very much on the agenda. Each country and every major company in the GCC are looking at ways to approach these new challenges and new opportunities. Of course not all companies are moving at the same pace in terms of sustainability but all are embarking on this journey.
In Kuwait, KPC and its subsidiaries are focused on setting the targets – this through consulting internal & external experts, assessing current assets, and looking at what sort of mitigation should be done. The aim being to identify the opportunities that will need to be developed in terms of decarbonisation and also adapt initiatives for those existing projects to cope with the new development.
For SATORP (KSA), the priority is no different than for other refineries – looking at cost optimisation and performance improvement are just some of the aspects that SATORP is focusing on. In addition to Saudi Aramco & Total’s existing sustainability programs, SATORP has also implemented its strategies, programs on sustainability, and transformation initiatives - these are built on the experience of their shareholders, plus ensuring that the company is compliant with government regulations as well.
OQ, in Oman, as an integrated refining and petrochemicals company, has recently launched its new pillar called ‘Alternative Energy’. OQ is looking to meet the net-zero by 2050 objective - there are various projects that are being developed and one of these is the Duqm Green Hydrogen Project (in cooperation with DEME). Upstream, OQ has partners working on capturing carbon opportunities and different solutions.
From the perspective of a producer and a technology-led company, SABIC’s priorities are achieving Carbon neutrality and reducing their carbon footprint. As part of the Saudi Green Initiatives, SABIC has a clear roadmap targeting carbon neutrality in the future and working with its partners to reach carbon neutrality by 2050. It is important to look at current assets and how to improve energy efficiencies and reliability driven by Saudi energy efficiency program goals.
Looking to the long term, SABIC has several initiatives already in the pipeline, one of these is electrification. SABIC, BASF, and Linde as an engineering arm have signed a joint agreement to develop and demonstrate solutions for electrically heated steam cracker furnaces and are evaluating the construction of a multi-megawatt demonstration plant at BASF's Ludwigshafen site in Germany - start up in 2023. Another focus is carbon capture utilisation and sequestration (CCUS).
SABIC has the largest neutralisation, purification, and reuse facility in their downstream for the methanol and urea, (500 KTA per year). It was also announced that SABIC will run its new site in Cartagena (Spain) fully operated by a solar farm. Prioritising SABIC’s recycling roadmap is the key to achieving its ultimate goal of zero measure by 2050.
SABIC has the largest neutralisation, purification, and reuse facility in their downstream for the methanol and urea, (500 KTA per year). It was also announced that SABIC will run its new site in Cartagena (Spain) fully operated by a solar farm. Prioritising SABIC’s recycling roadmap is the key to achieving its ultimate goal of zero measure by 2050.
Main Challenges & Key Factors in Achieving Net-Zero Goals
For TotalEnergies, hydrogen is another key sector – they are moving towards being a pioneer in the field of hydrogen. Also having sub-products that are less carbon-intensive is vital, for example; sustainable aviation fuel (SAF).
The importance of ‘acceptability’ should be emphasised to stay in the business and ‘profitability’ to finance the future. In 2012, TotalEnergies made the decision to merge their refining and chemicals divisions and that vision helped to achieve a more balanced business in the downstream sector.
It should not be understated that Fossil Fuels and conventional fuels are currently financing the energy transition. The industry is aware that market and industry trends can change very quickly, today risk might not be significant, but within no time we could see a huge impact on business.
Looking back to 2019, it was not foreseen that sustainability and decarbonisation could be critical factors in project development – at least not so rapidly.
Lenders and investors nowadays tend to be more stringent and prefer not to accommodate projects that are not sustainable-driven. It is not uncommon to hear, “Our shareholder and our board will not approve the project if it is not going to be meeting the sustainable goals.” It is indeed important to revisit the criteria of every project, be selective in new investments and ensure its adaptation to the ever-evolving industry.
Projects should be implemented to create value. They can be environmentally driven and at the same time financially efficient. We are seeing investment in technologies for renewables and carbon capture. These are quite expensive and at the same time, challenging for the IRR. But if we are serious in reaching the goal of net-zero, that comes at a cost – and possibly smaller profit margins.
For project investments, it should be something that creates value, which might require government backing or to have some incentives to move things forward. In addition, there is still a deficit in knowledge on these types of projects and therefore they require more collaboration and partnership with technology providers. This would help refiners and petrochemical producers gain knowledge and competency as well. Today, close collaboration with technology and equipment manufacturers is partially present but requires more engagement and asset-specific solutions that they can engage in early.
For project investments, it should be something that creates value, which might require government backing or to have some incentives to move things forward. In addition, there is still a deficit in knowledge on these types of projects and therefore they require more collaboration and partnership with technology providers. This would help refiners and petrochemical producers gain knowledge and competency as well. Today, close collaboration with technology and equipment manufacturers is partially present but requires more engagement and asset-specific solutions that they can engage in early.
For a sustainable future we should ensure that the business you have today is financing the business you will have tomorrow.
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