Director's Blog
April 2024
Beyond the Black Gold: The Rise of Green Oil
At the forefront of the new energy landscape, the fossil fuel industry stands redefined by its commitment to safety, sustainability, and innovation. This transformative era marks a departure from traditional practices, propelling the industry toward a future where safety, environmental stewardship, and governance form the cornerstone of operations.
Embracing Change: The Forces of Transformation
The Winds of Change: Environmental, Social, and Governance Dynamics
Several forces are driving a shift within our industry. Growing public advocacy for climate action demands substantial reductions in carbon emissions. In parallel, the investment community is gravitating towards high tech companies as well as companies exemplifying strong ESG credentials, recognizing sustainability as indicative of a company's resilience and strategic foresight into the new energy landscape.
According to Bloomberg Intelligence report (Global ESG Assets To Hit $50 Trillion by 2025 - Banking Exchange), Global ESG assets are projected to reach $50 trillion by 2025, making up one-third of global assets under management, signifying a growing recognition of the importance of sustainability and responsible investing in the financial world and the shift in investor priorities towards companies that are committed to positive environmental, social, and governance practices.
To illustrate the seriousness of this issue, there is currently a debate on whether Tesla qualifies as an ESG-focused investment company Troubled Tesla Faces a New Front—Is It an ESG Stock? - Bloomberg! This is noteworthy, especially in light of the growing accusations of greenwashing against fossil-fuel companies.
The Competitive Edge of Sustainability
Adopting a holistic approach to sustainability equips companies to navigate the emerging energy landscape successfully. A commitment to sustainable practices not only garners public acceptance, but also signals to investors a dedication to long-term viability and risk mitigation. As global energy shifts towards cleaner sources, the ability to produce oil and gas with minimal environmental impact becomes critical.
Companies that embrace safety and sustainability and innovation will be better positioned to thrive in the new energy landscape because they could simply continue to maintain a license to operate, renew and acquire PSAs, secure investments, and remain competitive.
Pathways to Green Production
Investing in the Future: Technological and Collaborative Innovations
The journey toward green oil production is multifaceted, necessitating significant investment in cutting-edge technologies such as Circular Carbon Economy technologies, CCUS, GTL, EOR, etc. These innovations promise to dramatically reduce the environmental footprint of oil and gas operations. Simultaneously, fostering research and collaboration across governments, industry players, and environmental organizations is imperative to catalyze the development and adoption of sustainable practices.
A New Market Landscape
A game changer of our industry is the AI revolution setting new standards for investment and growth around the globe. According to Artificial Intelligence Market Size and Share | Analysis - 2030 (nextmsc.com), the AI market is currently worth $200 Billion (more than doubled since 2021) signifying the potential it can bring into our industry towards a Safe, Sustainable, Green Oil Barrel.
The Reign of Oil
In the 20th century, oil was synonymous with progress. It fueled our cars, powered our factories, and air-conditioned our homes. This dependence on fossil fuels translated to immense economic growth for oil-producing countries and the companies that controlled the "black gold." Their stock prices skyrocketed alongside rising demand, propelling the entire market. Going back to 2008, ExxonMobil held the title of the world's most valuable company, highlighting the dominance of oil in the financial landscape.
The Rise of the Machines
Fast forward to today, and the landscape has undergone a seismic shift. Concerns about climate change and the relentless march of technological innovation especially in the field of AI have forced a recalibration of investor priorities. AI has emerged as a shining star. Companies pioneering this revolutionary technology are seen as holding the keys to the future. From self-driving cars to revolutionizing healthcare, AI's potential to disrupt entire industries has become a reality. Investors are pouring money into these companies, driving their stock prices and overall market influence to record levels. Take a look at the growth patterns of AI-related stocks such as Nvidia and semiconductor manufacturers to get the message.
Currently, out of the top 20 most valuable companies globally, there are only 2 oil companies, Saudi Aramco and ExxonMobil, according to Companies Market Cap: https://companiesmarketcap.com/. This reflects the market's shift towards technology giants.
Source: Quartz
A New Engine for Progress
This shift signifies a fundamental change in the way we view progress. Sustainability and innovation are the new driving forces, pushing clean energy and technological solutions to the forefront. While oil will not disappear, its dominance and profitability will be challenging. It is time for the fossil fuel industry to embrace the AI and sustainability wave.
The MENA Perspective: Harmonizing Legacy and Innovation
The MENA region, endowed with vast oil and natural gas reserves, is navigating the transition to sustainability with strategic finesse. Balancing its historical dominance in fossil fuels, the region is making strides in renewable energy, with significant investments in solar and wind projects. Efforts to harness carbon capture technologies and explore hydrogen as a clean fuel source further exemplify the MENA region’s commitment to a sustainable energy future as was highly visible at COP28 held in UAE last year.
Looking Ahead: The Industry's Role in a Cleaner Future
The fossil fuel industry is pivotal in shaping a sustainable energy landscape. Success in this new era is measured not by the volume of production alone but by the adoption of practices that prioritize safety, sustainability, and minimal environmental impact. This paradigm shift heralds a future where the industry thrives as a responsible steward of the planet's resources.
Mark Your Calendars: Engage with SPE Events
SPE offers invaluable opportunities to explore these industry transformations. Attendees of SPE not only bring a wealth of knowledge in core disciplines, but also provide insights into affordability, sustainability, and the technological innovations shaping the future of oil and gas. In 2024, 5 conferences with different flavors addressing the above are coming up in MENA (SPE Events | Upcoming Global Oil and Gas Events) :
- SPE Conference at Oman Petroleum & Energy Show: OPES - Muscat- 22-24 April. Theme: "Affordable, Sustainable, and Clean Energy."
- GOTECH: Dubai- 7-9 May. This event focuses on cutting-edge technologies with a focus on AI and Sustainability. This year’s event hosts integration with IOGP program as well as an AI-Hackathon for the first time. Theme: "Advancing Sustainable Energy Technologies through Innovation and Collaboration"
- SPE International Health, Safety, Environment, and Sustainability Conference and Exhibition: IHSES - Abu Dhabi – 10-12 Sept. Theme: “HSE, and Sustainability Excellence: Empowerment through Leadership, Diversity, and Innovation.”
- SPE Middle East Artificial Lift Conference and Exhibition: MEAL - Bahrain – 29-30 Oct. Theme: “Towards a Sustainable, Efficient, and Reliable Artificial Lift.”
- Abu Dhabi Petroleum Exhibition and Conference: ADIPEC – Abu Dhabi – 4-7 Nov. The biggest oil, gas, and energy event in the world, ADIPEC serves as a microcosm of the industry's current state. The theme is accelerating action towards a sustainable energy future. The conference will address decarbonization, clean energy investment and innovation, and Collaboration.
By attending these SPE events, industry professionals can stay informed about the latest trends and innovations that are driving the oil and gas industry toward a more sustainable and technologically advanced future.
These gatherings are more than just conferences; they are a testament to the industry's commitment to adapting and thriving in the face of change. Engaging with these events is not merely about staying informed—it's about actively participating in shaping the future of the oil and gas industry.
In this era of transformation, the oil and gas industry's journey toward sustainability and innovation is both a challenge and an opportunity. By embracing new technologies, fostering collaboration, and adhering to robust ESG standards, the industry can secure its place in a sustainable future. This vision for a thriving and responsible oil and gas sector is not just aspirational—it's within reach, guided by the collective efforts of those who are ready to navigate the future.
Looking forward to seeing you all at one of the above events soon.
Thank you,
Hesham Zubari