Environmental Engineering Reference
In-Depth Information
to streamline its strategy in coherence with its
initial core-business.
The vision of the future is decisive in the way
oil companies envisage their strategy and decide
to allocate a more or less important share of their
considerable resources in its realisation:
however does not provide certainty on the mag-
nitude of the transformation.
As a consequence, the vision of the transi-
tion to a low carbon economy by the oil industry
itself remains somehow partial. The strategies
are adopted at intra-firm level and encompass
eco-efficiency (increasing the energy content of
petroleum products, energy efficiency of process,
etc.), and to a lesser extent, some attempts of
eco-branding with the introduction of biofuels.
These strategies rather focus on the core activi-
ties (process and products), i.e. on the upstream
nature of the oil industry activities. There is no
attempt to create rupture in the nature of business
or reinvent the business. The companies rather
try to move downstream, with the acquisition of
competences in existing other energy businesses
like power production.
However these companies do not really envis-
age strategies that will trigger a radical shift to a
low carbon world. Indeed, there are dedicating very
little amounts of their considerable investment
capacities to the reconfiguration of downstream
usages of petroleum products that will underlie
a progressive regression of activities based on
E&P and petrochemicals. For instance, the vision
of their involvement in low-carbon transport is
often restricted to the development of biofuels,
cleaner fuels and lubricants and to the promotion
of educational programmes dedicated to motor-
ists. Projects that tackle the usages of oil are very
rare (we can mention a BP project supporting
research on mobility with Tshinghua University
or WBSCD).
•
it impacts the timeframe to which they
project their strategies (in the long-term for
BP, on the shorter-term for Total);
•
it impacts the way they envisage their
business evolution according to the market
share they acknowledge to renewable ener-
gies on the mid and longer term.
However, there is no credible threat that on
the mid-term oil demand will considerably drop.
The business is likely to remain profitable, as
the increase in energy demand in fast growing
economies create tensions on the market and may
sustain prices on the longer term, emphasised by
the depletion of conventional oil reserves. The
prospect of higher prices may allow the exploita-
tion of large reserves of non-conventional oil (oil
shale) and maintain confidence for high returns
to shareholders. The question is therefore rather
to which extent the business will expand, as a
result of interaction between energy security is-
sues, economic and environmental considerations.
Indeed, even in a configuration where a serious
decarbonisation of the economy take place, fossil
fuels will constitute a significant share
15
of the
primary mix, whereas in practice, it accounts for
a severe reduction of oil demand compared with
“business as usual” trends. A BAU scenario is
however not desirable even for oil companies as
it would create tensions on production capacities
with possible severe economic and geopolitical
impacts. External drivers such as emission regula-
tion and the implementation of energy and climate
strategies at state level in major economies (more
proactively in Europe, under serious development
in China, in consideration in the US) confirm that
Remaining Challenges for the
Transition in the Oil Industry
Independently of the oil market evolution, oil com-
panies still need to improve their E&P practices to
reduce their direct environmental impacts, not only
on climate change but also on local ecosystems
and population. There are two main challenges:
