Theme Session: Energy Transition : Impact on Downstream industry

Downstream Theme Session, key highlight of Day 2 at Petrotech conference was moderated by A.T. Kearney’s India Managing Director Mr. Vikas Kaushal, with participation from distinguished panelists including Mr. M.K. Surana (CMD, HPCL), Mr. B Anand (CEO, Nayara Energy), Mr. Prabh Das (CEO, HMEL), Mr. Fereidun Fesharaki (CEO, FG Energy), Mr. Christian Cabrol (Sr. VP, TOTAL OIL Asia Pacific PTE Ltd), and Dr. Abderrezak Benyoucef (Head of Energy Studies Department, OPEC).

Dignitaries on dais

The session started off with a recognition by all panelists that Energy Transition is a worldwide phenomenon. A new energy system is emerging, transitioning towards a lower carbon energy system. This evolution is creating opportunities and challenges for stakeholders across the energy value chain.

The session progressed with business leaders in downstream sharing their views on the the drivers for Energy Transition, deliberation on the impact of Energy Transition on the downstream sector, and problem-solving on how companies can use this opportunity to evolve their business models.

Mr. Cabrol shared that TOTAL believes in the imminence of Energy Transition. To adapt its strategies TOTAL has developed scenarios which range from BAU to Disruptive scenario. Across the scenarios key themes are 1.) energy efficiency will be a major driver, 2.) No matter what, Oil is here to stay, share may go down, but an important source 3.) Gas will play a major role, including LNG.

TOTAL’s strategy is to stay relevant across all energy scenarios and thus it has made bets ranging from EVs, electrification to renewables. Mr Cabrol also explained the energy efficiency improvement initiatives of TOTAL including reduced flaring, improvement in refinery efficiency by 1% y-o-y. He also shared that TOTAL will be #2 LNG player in the world in a few years with 40 MTPA LNG portfolio.

Mr. Surana described that Energy Transition was both an opportunity and a challenge for India. He maintained that Oil in India’s energy mix will continue to grow. He shared the evolving view for the sector, and explained that earlier refineries were thought to be forever, however now capacities will be added based on whether the business case is viable before the Energy Transition disrupts it. Mr. Surana highlighted the plays of HPCL which include RE, bio-fuels, and Petchem as diversification themes.

Mr. Das shared his bullish views for Oil for India. He maintained that EVs are not a big threat, as the electricity generation requirement for EVs cannot be met through RE, and using coal will be counter productive to the EV narrative. He also explained that BS VI emissions are lower than natural gas – and so Oil is not expected to get disrupted. Mr. Das explained that Petchem will be a growth story for all refineries. He also presented that Digital Transformation can be a bigger disruption in the nearer term.

Mr. Fesharaki projected that Oil Peak for the world can be expected in early part of the next decade, while for India it might be closer to 2040. He also segregated the difference between the Peak Oil Supply – which he forecasted will be achieved at closer to 150 mboepd, and Oil Demand Peak which was expected in the 2030s. He concurred with Mr. Das that EVs have a long way to go before they become a threat.

Dr Benyocef represented that for OPEC and for the world Oil will maintain its importance, given the under penetration of energy consumption in the world. He also agreed with growing importance of RE.

Mr. Kaushal concluded that

• The Energy Transition is well recognized as an imminent evolution

• Oil will plateau differently in each of the regions

• Globally, gas will be important cleaner fossil fuel

• Petchem is an integral part of all diversification strategies

• All companies are preparing for the change with other diversification bets

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