08 Jun 2021 | 10:36 UTC — Insight Blog
Fuel for Thought: India's recovery road map prompts oil majors to accelerate energy transition plans
Featuring Sambit Mohanty
India's road to recovery from the pandemic's deadly second wave may help fast track oil majors' ambitions to expand their portfolio in Asia's fastest-growing energy market while at the same time reducing their carbon footprint.
With plentiful funds expected to support an economic recovery from the COVID-19 crisis, CEOs of leading global companies are hopeful a large part of that relief will flow into the energy sector, creating opportunities in both fossil fuels and in clean energy.
"Perhaps a post-pandemic economic recovery anchored around sustainability and climate action could well be the prudent way," Nitin Prasad, chairman of Shell Companies in India, said in an exclusive interview with S&P Global Platts. "We also believe that there are opportunities to accelerate our activities to help the country recover cleaner and faster, which we are actively encouraging the government to consider."
The pandemic has neither altered the country's long-term robust energy fundamentals nor Shell's commitment to grow its business, Prasad said, and he believes that with every crisis comes an opportunity.
"My vision for India is one with a clear focus on decarbonization and climate action, but in a fair and equitable way," Prasad said.
The pandemic has encouraged Shell to shift the role of its fuel stations, converting them into safe havens by ensuring proper sanitization, social distancing and contactless transactions.
From hydrogen to biofuels
A study Shell jointly conducted with The Energy and Resources Institute highlighted how the country will need to evolve as energy demand in India is set to almost double by 2050.
In order to transition into a net-zero future, the share of the country's electricity in its energy mix needs to grow to more than 50% of energy use, with rapid electrification of energy services primarily from renewables.
Fuels as molecules—such as crude oil, natural gas, coal, hydrogen, biofuels and biomass—will meet the remaining energy consumption basket. In addition, liquid biofuels need to surpass petroleum products by 2040 in fueling industry and transport, including hard-to-abate sectors like aviation.
"We believe that hydrogen will play a key role in the net-zero emissions journey of India's energy system," Prasad said.
Bill Davis, CEO and lead country manager for ExxonMobil South Asia, said in India's road to recovery and move towards energy security there be higher demand for lower emissions and affordable energy, and finding hydrocarbon resources domestically will be crucial.
"There is no denying the need to simultaneously pursue further emission reduction efforts and technologies to support the transition to a lower carbon future," Davis told Platts. "It's really a question of doing it in a smart way.
Related content—Platts India CEO Series:
India aims to cushion oil shock by doubling strategic petroleum reserves: H.P.S. Ahuja, ISPRL CEO
Hard-to-decarbonize sectors
ExxonMobil is developing technologies to make refining less energy-intensive and is researching breakthroughs to make future solutions like carbon capture more affordable for a wide range of applications.
The transportation sector, being a key component of India's transition to a gas-based economy, is another areas of focus for ExxonMobil. As India prepares the adoption of LNG as a vehicular fuel, ExxonMobil is working with GAIL to build opportunities that add impetus to that vision.
ExxonMobil expects natural gas to do a part of the heavy lifting to support economic growth following the pandemic. The company is working with leading Indian energy companies to accelerate gas access for industries, transportation and other applications.
"As India transitions to lower-carbon sources, it has concrete emission reduction plans consistent with making energy access more equitable and affordable," Davis said.
ExxonMobil is one of the world's largest producers of hydrogen, and as its potential for use in the transition to a lower-carbon future develops in India, Davis believes the company is well positioned to apply its experience, scale and technology to contribute.
"Hydrogen can be useful in hard-to-decarbonize sectors, such as fuel for heavy-duty trucks, and to produce high-temperature industrial heat for steel, refining and chemical industries," Davis said. "Low-carbon hydrogen from natural gas with carbon capture and storage, or CCS, has cost and scale advantages in the near and medium term."
Outside the global majors, leading Indian oil companies are also stepping up efforts to ensure they are not left behind in the race.
Shrikant Madhav Vaidya, chairman of Indian Oil Corp., said while IOC's strategic growth path will focus on its core refining and fuel marketing businesses with a bigger petrochemicals presence, hydrogen and electric mobility will figure prominently in its portfolio over the in the next 10 years.
IOC is pushing ahead with research on carbon capture, utilization and storage technologies, a space where it is seeking global collaboration to meet its Paris climate goals.
"We are at an advanced stage of embracing such technologies for energy transition," Vaidya said.