Mix of technologies can enable industry to lower emissions

Global gas prices may see some correction in the next few years, thanks to the higher investments in natural exploration and production projects that may result in a number of projects coming online in the next few years, Patrick Pouyanné, the Chairman and CEO of TotalEnergies, said during a panel session on the first day of ADIPEC 2023.

He said that at present, due to the conditions stemming from the geopolitical tensions in Europe, the prices of energy, particularly natural gases, have risen significantly, and this has resulted in a decline in demand for gas. But this trend can be reversed in the future if there is a decline in the price of energy.

“I can make an announcement today... By 2028-30, natural gas prices may decline because we have too many energy projects coming online at the same time,” said Pouyanné while speaking on ‘The importance of gas markets: energy and security and affordable energy solutions for all.’

On the prospects of LNG as a fuel enabling a reduction in overall carbon emissions, he said that the gas has the capacity to become the desired fuel, but the main question here is affordability.

Pouyanné said overall, the demand for LNG as a fuel for generating power and running heavy industries has been continuously rising in the past two decades.

He said the demand for natural gas is likely to grow continuously thanks to the increased demand from Asia, particularly India, and China, where LNG is fast becoming a preferred fuel for them to enable the energy transition from coal to a lesser carbon-emitting fuel.

According to him, there is some distortion in the current market as higher subsidies provided by some European countries pushed the prices of natural gas higher at a time when there was a supply crunch and it resulted in the decline of shipments to Asian countries, thereby pushing them towards coal to meet their energy demand.

“New markets such as India and China are opening to LNG, mostly as part of their plans to reduce coal burning to generate power,” he said while cautioning that the current scramble for LNG supplies has resulted in supplies from traditional producers such as Qatar being diverted to Europe.

This has jeopardised overall climate goals as these countries are now relying on more environmentally polluting fuels to meet their requirements, he said, adding that Asian countries are now scouting for long-term contracts for LNG shipments to safeguard their interests against energy price volatility.

On challenges, Pouyanné enlists two major hurdles that the industry is facing now: the first is uncertainty in demand following the volatility in prices, and the second is to curb emissions, particularly methane emissions.

He explained that uncertainty in demand can be addressed through long-term contracts based on a pre-fixed price formula, while emissions can be addressed through higher investments in carbon capture projects and by improving efficiencies.

The challenge to reduce methane emissions is still very much there, and it would require a mix of many technologies to effectively tackle this problem, said Pouyanné. Citing the example of the French major, he said that they have been able to reduce methane emissions by around 90% in the past two decades.

He also called on the world’s oil and gas companies to set targets to reduce emissions from methane, a potent greenhouse gas, at the COP28 climate summit, which will be held in the United Arab Emirates later in the year.

TotalEnergies aims to become a net-zero company by 2050 and has pledged to reduce emissions from all of its products by 40% in 2030.

Explaining their group’s future strategy, Pouyanné said going forward they will earmark around one-third of their total investments for the natural gas segment, another one-third for the oil and gas segment, and the remaining one-third will be for power generation, most of which will be through renewable platforms such as solar, wind, or tidal.