Gas will 'Underpin Transition from Oil to Energy:' BP
Natural and renewable gas will form the backbone of the newly reinvented oil major BP's ultimate goal of a low – and net zero – carbon future, said the executive vice president for gas and low carbon energy Dev Sanyal. He was speaking on September 15, the second day of BP Week.
As part of the series of webinars to convince the market that BP's radical shift in its business – from primarily oil, refining and gas to one focused on power and energy trading – he said that gas was the enabler of firm sales of electrical energy. Renewable energy that is firm will require battery storage that is not yet commercially available at scale.
Energy needs to be firm, clean and affordable, the company says; but without dispatchable gas-fired plants, that cannot happen. Hydrogen, carbon capture, use and storage, bioenergy and energy system integration will all play their part in decarbonising methane where possible. Sanyal also said that as well as becoming cheaper, solar was becoming faster to build, although it still takes two years to go from concept to construction.
Liquefied natural gas will double in the company's equity sales, from 14.9mn metric tons/year last year to "over 30mn mt/yr" by 2030. The target for 2025 is 25mn mt, and some of that will come from offtake agreements from new production in Mozambique (Coral LNG) and the US (Freeport LNG). That said, BP executives have also repeated during the webinars that it would chase value, not volume: its 40% reduction in oil and gas output by 2030 would be managed by focusing on more profitable hydrocarbon reserves, and any new production would be at the highly sought-after low-cost, quick-return end of the spectrum. It is already half way through its disposals programme, and the remainder are at various stages of discussions. However they are good assets, CEO Ben Looney said, rejecting the suggestion of a 'fire sale.'
Trading and shipping were also important elements, accounting for 2% of the company's return on average capital employed in an average year.
LNG will be traded further downstream as the company is looking to capture more value, with a 3.3-GW power project in Port Acu, Brazil; and two downstream regasified LNG sales agreements in China. These contracts have been linked to LNG prices instead of the traditional oil derivatives' prices. In the US, it is a major seller of renewable natural gas to the transport sector.