* Petronas re-thinks portfolio after "great reset"
* Shell still sees "huge future" in hydrocarbons
* Vitol calls on energy industry to invest more in CCS
* Carbon pricing key for CCS to take off - Citi
By Florence Tan and Chen Aizhu
SINGAPORE, Sept 15 (Reuters) - The economic trauma caused by
the coronavirus pandemic persuaded energy companies to step-up
investments in renewables, hydrogen and other low carbon
alternatives, but fossil fuels will remain dominant for the
foreseeable future, industry executives said.
Reeling from the onset of the pandemic, global oil
consumption shrank by more than 20% in the second quarter and
prices hit their lowest in decades, making companies rethink how
fast they should make the transition away from reliance on oil
and gas.
"Everyone's talking about this great reset ... What do we
need to do to survive this?" Arif Mahmood, Petronas' executive
vice president and CEO of downstream, said at the virtual Platts
APPEC 2020.
"Energy transition will be pushed forward much faster," he
concluded.
The Malaysian state energy company posted a $5 billion loss
in April-June and has set up a team to reshape its portfolio and
expand in solar and wind for power generation.
Oil majors such as BP have set ambitious targets
while Chinese state energy companies tiptoed into renewables.
Felipe Bayon, chief executive of Colombia's Ecopetrol, said
the company wants to go from zero to 300 megawatts (MW) in
renewable power generation by 2022 for its own use.
Besides expanding into solar and wind for power generation,
more energy companies are researching blue hydrogen produced
from natural gas and using carbon capture and storage (CCS) to
reduce emissions in the process. The hydrogen could be used in
power plants and fuel cell vehicles.
Royal Dutch Shell is involved in biomethane,
biofuels and hydrogen and has done "significant work" on CCS as
the energy major strikes a balance between energy transition and
its core hydrocarbons business, Mark Quartermain, Shell's vice
president of crude trading & supply, told the conference.
"We understand that energy transition is coming. We still
see, of course, a huge future in our hydrocarbon business, but
when it comes to energy transition we need to be in these
markets," he said.
Heads of research at commodity trader Vitol and Citigroup
expect CCS to be the next key area of development.
"Hydrogen and carbon capture are more likely in short term
to be contributing to decarbonization," Giovanni Serio, Vitol's
global head of research, said, calling on the industry to invest
more in CCS.
"Some countries are finding ways through credit systems and
other mechanisms to price carbons...It's what's really needed
for carbon capture to take off," Ed Morse, managing director and
global head of commodities research at Citigroup said.
However, "the cost structure of hydrogen is just not
competitive enough...it's there but it could be end of the
decade phenomenon," Morse said.
(Reporting by Florence Tan, Chen Aizhu and Koustav Samanta;
Editing by Simon Cameron-Moore)
