- Oil has surged to multi year highs, with Brent crude temporarily topping $70 for the first time since the start of the pandemic.
- Abu Dhabi National Oil Company (ADNOC) is eyeing new partnerships in carbon capture technology as rising oil prices refresh the focus on big oil’s climate mitigation strategies.
- ADNOC Managing Director and Group CEO expects oil demand to rise above pre-Covid levels by the end of the year.
DUBAI, United Arab Emirates — Oil rich Abu Dhabi and its national oil company are eyeing new partnerships in carbon capture technology as rising oil prices put a renewed focus on big oil's climate mitigation strategies.
"There is no credible way of reaching global climate goals without seriously advancing and ensuring the widespread adoption of carbon capture and storage," Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and Abu Dhabi National Oil Company (ADNOC) Managing Director and Group CEO said over the weekend.
Carbon capture and storage (CCS) technology aims to reduce the level of carbon that's released into the atmosphere through conventional power generation and industrial processes by storing waste carbon in a place where it won't enter the atmosphere, typically underground. Long-term carbon storage is a fairly new concept, and its environmental, economic and technical aspects are still being debated.
ADNOC, which pumps more than 3 million barrels of oil a day, has pledged to lower its greenhouse gas emissions and boost CO2 storage. It joins a long list of oil majors that have come under increasing pressure to speed up climate efforts as higher prices put the industry on a more sustainable path.
"This goes beyond just the oil and gas industry," Al Jaber said. "I see an opportunity and an important role for carbon capture and storage across sectors that are hard to decarbonize and that use the most energy, such as heavy industry, manufacturing and chemicals," he added.
Al Jaber made the comments last week at a virtual CERAWeek panel session alongside Vicki Hollub, CEO of Occidental, and energy economist Dan Yergin, Vice Chairman of IHS Markit.
Oil prices spiked on Monday, with Brent crude topping $70 after an attack on Saudi oil facilities and after OPEC and its allies decided to keep production cuts in place in April. Higher prices are a boon for the key oil exporters of the Gulf, like Saudi Arabia and the UAE, which still rely heavily on oil export revenues to drive economic growth. Oil prices collapsed below zero and into negative territory in April last year.
ADNOC recently partnered with French oil major Total to explore opportunities in CO2 emission reductions and CCS. It comes as the UAE aims to reduce its carbon intensity a further 25% over the next decade.
"We continue to see it as a game changer, and we are very ready to partner with others within and even outside our industry to enable wider CCS adoption," Al Jaber said.
ADNOC, which has plans to aggressively ramp up oil production capacity in coming years, says it can capture 800,000 tons of carbon dioxide annually through its Al Reyadah facility in Abu Dhabi. As oil production capacity grows, it also plans to expand the capacity of the program to capture 5 million tons every year by 2030.
"Carbon capture, utilization and storage (CCUS) will need to form a key pillar of efforts to put the world on the path to net-zero emissions," the International Energy Agency said in a publication last year. "After years of slow progress, new investment incentives and strengthened climate goals are building new momentum behind CCUS," it added.
Al Jaber, who's also the UAE's special envoy for climate change, didn't say what type of partnerships the company was seeking to form. ADNOC recently said its also exploring the potential of new fuels such as hydrogen, which Al Jaber said shows "great promise as a close to zero-carbon fuel" that could be produced at scale as part of ADNOC's existing hydrocarbon value chain.
Al Jaber also expressed optimism on the positive impact of vaccines and stimulus programs on the global economic recovery, which feeds directly into oil demand.
"Looking regionally, we see that one of the major powerhouses of the global economy, China, has already recovered in GDP terms, and is back to robust growth," he said. "We expect another key player in the global economy, the U.S., to return to its pre-Covid level of GDP this year and continue growing into 2022," he added.
Al Jaber also pointed to the improving recovery in oil demand, which fell to lows of around 75 million barrels per day at the height of global lockdowns. "Global consumption is currently around 95 million barrels per day and we expect it to rise above pre-Covid levels by the end of this year," he said.