Decarbonization in the shadow of oil and gas. More tanker and terminal operations in 2024 and 2025

By Marek Grzybowski

Companies operating in the oil and gas production and distribution market are closely monitoring the green energy production market. As many as 74% of entrepreneurs operating in the oil and gas market believe that oil and gas companies play a leading role in accelerating the energy transition, and 55% of them say that their organization is actively adapting to an energy mix characterized by lower carbon dioxide emissions – according to the latest DNV report “Energy Industry Insights 2024”.
The report was produced in cooperation with FT Longitude (a Financial Times company). It is the result of collecting the opinions of almost 450 experienced specialists operating in the oil and gas industry. Its aim is to examine rapidly changing trends and short-term prospects for the oil and gas sector. The comprehensive research is based on in-depth interviews with industry leaders and experts. The study was conducted between February and March this year.
It contains information from various management and executive levels. The information was collected from both management staff and senior engineers. The environmental news is interesting because the oil and gas industry is still holding strong despite growing renewable energy supplies. And according to EIA forecasts, the activity of the oil and gas sector will not weaken in the near future.

Rising prices and demand for oil
– In 2025, we expect global production of liquid fuels to increase by 2.2 million b/d (barrels per day). As the first round of voluntary OPEC+ production cuts is phased out over the course of the year, OPEC+ production will increase by 0.7 million b/d combined with a 1.4 million b/d increase in production in non-OPEC+ countries, U.S. experts assume. Energy Information Administration (EIA).
According to EIA, global consumption of liquid fuels will increase by 1.1 million b/d in 2024 and 1.5 million b/d in 2025. The greatest growth will be generated by non-OECD countries, which increase their consumption of liquid fuels by 1.1 million b/d. d in 2024 and 1.3 million b/d in 2025. Non-OECD global demand is driven by China and India. These countries will increase consumption by a total of 0.6 million b/d in 2024 and 0.7 million b/d in 2025.
Disruptions in the Gulf of Aden will also increase demand for petroleum products. EIA predicts an increase in the consumption of liquid fuels from non-OECD Asia due to increased demand for bunker fuel caused by the extension of shipping routes.
– We expect bunker fuel increases to account for approximately 10% of the increase in total oil consumption in 2024. In OECD countries, liquid fuel consumption will remain relatively stable in 2024, increasing by 0.3 million b/d in 2025 . – assumed by EIA.

Oil and gas and climate commitments
As demand for fossil fuels grows, DNV’s question remains: Should oil and gas companies maintain their climate commitments regardless of market movements, new management or any other changes?
However, if we are faced with the desire to reduce CO2 emissions, the question arises: Shouldn’t oil and gas companies use a larger share of their profits to facilitate a faster transformation?
DNV experts also asked managers of companies operating in the industry: What would make oil and gas companies commit to more ambitious climate goals? The answers were basically clear.
– Our research shows that the biggest barrier to focusing on renewable energy sources and clean energy is low profits or unsatisfactory profitability – says the main conclusion of the research DNV report. It was also decided to find the answer “are these profits generating losses or simply profits lower than those obtained from oil and gas? Can oil and gas companies accept the pursuit of business models with lower profit margins, lower risk and more stable revenue flows?”
According to DNV, “The challenge is to adapt expectations and strategies to the new reality. – In my opinion, it is about creating several solutions for the future, so that we are not dependent on one specific path, said Antony Green, executive director of Future of Energy, SGN, in a statement to the authors of the report. he says, “Hydrogen is part of the equation, just as biogas and synthetic natural gases can play a role – it’s about exploring all the options and then using the right tool, at the right time, in the right place.”


Decarbonization with oil in the background
This is consistent with the assumption that we will have to use all available levers to achieve the climate goals of the Paris Agreement – say DNV and FT specialists and emphasize: “As long as we are moving in the right direction and at the right speed, we can use various methods.”
– Our goal is decarbonization. “I think we all have the same goal across the energy industry,” says Jane Liao, vice president of CPC Taiwan, a state-owned oil and gas company. He notes that “there are many ways to decarbonize and many technologies that can help [achieve this goal -MG].” In his opinion, there is no competition between green and blue hydrogen and electrification and decarbonized natural gas.
“Regardless of fossil fuels or not, if we can decarbonize, we are still making progress towards a low-carbon energy system,” emphasizes Jane Liao.
The second half of 2024 may be decisive when it comes to industry revenues. EIA notes that “Brent crude oil spot prices averaged $82 per barrel (b) in May, down $8/b from April. Daily spot prices also initially declined following the OPEC+ announcement on June 2, closing at $78/b on June 6. But on June 24, they were reaching USD 83.21/b.
– The extension of OPEC+ production cuts through the third quarter of 2024 has led us to lower our OPEC+ oil production forecast for the rest of 2024. We expect the reduction in OPEC+ oil production in the second half of the year to push Brent prices up to an average of USD 85/b in the second half 2024 – informs EIA.
Higher profits from oil and gas trade may therefore discourage investment in renewable energy. DNV and FT analysts therefore note that companies in the oil and gas sector are on track to recovery after poor results in 2020. Demand for oil and gas remains high, and the sector is investing in the development of reliable sources of supply.

The paradox of transformation
– These conflicting views are a symptom of a more fundamental paradox that defines today’s oil and gas sector, in which the existential threat of climate change collides with the enormous global demand for petroleum products – experts note, stating: “In essence, this is a paradox of transformation – of how quickly the world can make a safe, global and just transition towards a low-carbon future.”
However, good oil and gas prices do not put managers operating in this industry to sleep. Investments are being made in wind energy, solar energy, hydrogen, capture, utilization and storage of carbon dioxide. Work is underway to produce biofuels. The above-mentioned activities are starting to generate new sources of revenue – note DNV and FT specialists.
– Higher interest rates and supply chain problems appear to have slowed down progress [in renewable energy deployment] – experts say, and therefore postulate: “new business models – and entire value chains – will need to be built and improved to ensure that these investments they still made business sense.”
The oil and gas sector is also working to slim organizations and transform them into learning companies. Information technologies and innovations are being implemented on a large scale. These other activities make gas and oil extraction safer, a sector that has lower emissions and is more environmentally friendly.
Observations from the oil and gas industry show that operators of oil and LNG tankers and product carriers are more advanced in introducing ecological solutions. There is significant progress in replacing ships servicing drilling platforms with environmentally friendly ones. The beneficiary of this trend are production and repair shipyards. Fuel terminals and port terminals servicing LNG tankers have also adopted a decarbonization course. The oil and gas extraction industry is therefore slower to engage in the decarbonization process than port operators and authorities.