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Supporting The Oil And Gas Sector And Investing In The Energy Transition Is Not Contradictory, Says BNDES. WEF Warns That Current Mechanisms Are Insufficient For Decarbonization.
The oil and gas sector is playing a crucial role in promoting the global energy transition. According to BNDES, supporting this industry and investing in sustainable alternatives are actions that do not exclude each other. The World Economic Forum (WEF) has issued significant warnings that current mechanisms are insufficient to achieve effective decarbonization, highlighting the need for more innovation and investment in this regard.
In the context of the oil industry, the challenges are multiple, but opportunities are equally vast. The oil and gas sector has the capacity to lead a significant transformation, not only in how energy is produced but also in how it is consumed. The need to decarbonize the global economy implies that sectors such as oil and gas must implement more sustainable and efficient solutions as soon as possible.
Financing And Energy Transition
For BNDES, there is no contradiction in providing support to the oil and gas sector while simultaneously investing in the energy transition. Elisa Lage, head of the Oil, Gas and Navigation department of the bank, mentioned during the Financing of the Energy Transition panel, held on Wednesday (25), part of ROG.e, one of the largest energy events in the world, taking place at the Olympic Boulevard in Rio de Janeiro until Thursday (26). Over the past 20 years, BNDES has financed the oil and gas sector through numerous projects in the areas of gas transportation and distribution, refining, and fuel distribution, among other ventures.
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The rise in oil prices could ensure an extra revenue of R$ 100 billion for the Federal Government, indicates a recent economic study.
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Naturgy begins an investment of R$ 1.6 million to expand the gas network in Niterói and benefit thousands of new residences and businesses.
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A major turn in the Justice system suspends tax increases and directly impacts oil and gas companies in Brazil by affecting costs, contracts, and financial planning, leaving uncertain what could happen to the sector if these costs had increased.
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Brava Energia begins drilling in Papa-Terra and Atlanta and could change the game by reducing costs in oil while increasing production and strengthening competitiveness in the offshore market.
Natural gas is an essential component of the energy transition agenda, as it is necessary to meet demand during intermittency. The executive emphasized that the bank is also focusing efforts on the decarbonization of the oil industry on various fronts, including refining, transportation, distribution, and energy efficiency.
Challenges In Emerging Countries
Present at the panel, Thales Panza de Paula, responsible for Latin America engagement at the World Economic Forum (WEF), stressed that current financing mechanisms are insufficient to meet the decarbonization targets established in the Paris Agreement. ‘The major challenge currently lies in emerging countries, where it is necessary to double the investments‘, he pointed out. In these regions, the main difficulties include the high cost of financing, the limited governmental borrowing capacity (over 50% of financing comes from the public sector), the low development of capital markets (with Brazil as an exception), and exchange rate risk.
Despite these adversities, the flow of investments in energy sector projects shows a growth trend, with expectations of US$ 3 trillion in 2024, of which US$ 2 trillion will be dedicated to clean energy and US$ 1 trillion to fossil fuels. These investments are especially prominent in China, the USA, and Europe, while emerging markets attract about 15% of total investments. The panel also featured the participation of Bruno Aranha, professor at FIA and founder of YvY Capital; Victor Santos, associate director at BTG Pactual; and Gilberta Lucchesi, CFO of Repsol Sinopec Brazil, who acted as moderator.
Decarbonization Of Industry
The challenges of decarbonization in industrial sectors such as steel, cement, and fertilizers were discussed in the panel ‘Hard To Abate Industry‘. Jorge Oliveira, CEO of ArcelorMittal, indicated that the company is accelerating the use of green solutions, such as charcoal and scrap, and investing in energy efficiency. However, he emphasized that the application of renewable technologies on a large scale still faces cost barriers. ‘Brazil has renewable energy at the base of its energy matrix, which can be a global competitive advantage’, he stated, highlighting the importance of public policies and market regulations for attracting investments.
Osvaldo Ayres, CEO of Votorantim Cimentos, shared that the company has been accumulating knowledge through pilot decarbonization projects in various countries, including electrification and CCUS in the USA and Europe. Daniel Hubner, senior vice president of Yara Fertilizers, acknowledged the challenges faced by some sectors in the decarbonization process but sees potential in local solutions, such as biomethane in Brazil. ‘We globally reduced our emissions by 45% from 2005 to 2018, with improvements in catalysts and energy efficiency. Now we need to seek new routes’, he said, highlighting biomethane as a promising avenue to be explored.
The Quantum Computer Revolution
Claudio Makarovsky, industrial director of Energy and Natural Resources at Microsoft, announced at the panel ‘Artificial Intelligence and Quantum Computing: The Future of The O&G Industry’, held during the iUP Innovation Connections, a parallel event of ROG.e, that by 2030 we will have a global quantum computer focused on molecular mapping and new drug development. Flavio Waltz, partner of Digital Operations at E&Y, commented that in a 2022 survey of over 500 European executives, 48% believed in practical applications of this technology by 2030.
Clécio de Bom, professor at the Brazilian Center for Physics Research (CBPF), highlighted that in the future, companies will find their own paths to develop disruptive technologies, while Marc Spieler, energy director at NVIDIA, predicts that the boom of quantum computing is still to come, and in the future everyone will have both a classical and a quantum computer.
Gender Equity In The Industry
Efforts to promote gender equity in the O&G industry are reflected in the sector’s numbers. A 2023 study by the International Association of Oil and Gas Producers (IOGP) indicates that there is an average of 23% female participation in companies in the segment. Luciara Queiroz, Brazil Sustainability Manager at SLB, mentioned this data at the panel ‘Women In The Energy Industry: Challenges And Opportunities For Gender Equality’, held at the DE&I Forum. Ana Gati, president and founder of the Women And Operations Institute (MEO), emphasized that female representation is associated with better financial results, commenting that, according to McKinsey, companies with a high presence of women demonstrate 25% superior performance.
Moreover, professional development is crucial. Camila Santiago, Maintenance and Reliability Manager at Constellation, pointed out four essential factors for success: communication, resilience, emotional intelligence, and technical competence. The combination of these elements led to the promotion of Eduarda Lacerda, general manager of Petrobras’ Espírito Santo business unit, even during pregnancy. Luisa Moura, Diversity analyst at Wilson Sons, added that the key to diversity is the intentional exposure of different groups to the challenges that one wants to face, which defines what social representation is.
About The ROG.e
ROG.e is one of the largest energy sector events in the world, organized by IBP. The event is expected to attract over 70,000 visitors from 65 different countries, including sector leaders, authorities, investors, and academics. Occupying eight warehouses, with over 550 exhibitors, seven parallel events, and a Congress, ROG.e 2024 counts on the sponsorship of renowned companies such as Petrobras, Shell, TotalEnergies, Equinor, Galp, Origem, Brava, Petronas, Prio, bp, Chevron, ExxonMobil, Modec, Repsol Sinopec Brasil, SBM Offshore, Acelen, Eletrobras, Excelerate Energy, Ipiranga, Pan American Energy, Vibra, Dell, Nvidia, Naturgy, TechnipFMC, TBG, Trident Energy, ABB, Construtora Elevação, Compass, Foresea, Huawei, Karoon Energy, OceanPact, Perbras, Subsea7, TAG, Transpetro, Vallourec, Renave, and the participation of the Federal Government.
Source: Bruno Postiga
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