CALGARY, Alberta – For oil and gas producers in West Africa, Indonesia and Brazil, the demands of the energy transition aren’t merely far-fetched, but tantamount to “suicide.”

During a panel discussion at the World Petroleum Congress, Osvaldo Inácio, board member of Angola’s national oil company, Sonangol, obliquely referred to the International Energy Agency’s pathway to net zero emissions report, published in 2021, which posited that “no new oil and natural gas fields are needed.”

“Whether I would actually consider stopping production at all will be the same thing as you asking a homeless person to go on a diet,” Inácio said of the Paris-based IEA report.

“If we were to stop sanctioning additional upstream projects or activity, that means literally we wouldn't have any oil to go through the refineries that are being built—not only to meet the country’s demand, but also the region’s. So stopping will mean almost like committing suicide.”

Inácio said the further danger is that such suggestions “come along together with a call to stop financing fossil fuel or fossil fuel projects.”

As the developed world works to arrest emissions and decarbonize operations, Angola is doing so as well, but cannot halt its economic development, he said.

Inácio and executives from Indonesia’s Pertamina and Brazil’s Petrobras said they share the same emissions reduction objective, but they have to proceed at their own pace to best serve their own populations. Just those three names alone account for nearly 540 million people in a global population of more than 8 billion and growing.

“We can say that [there is] no single solution for all,” said Nicke Widyawati, president and CEO of Pertamina.

When dealing with post pandemic ramifications, geopolitical tensions and a lack of energy investment, Widyawati said each country has to put its own put energy security and resiliency at the top of their agenda. While Pertamina has invested in electric vehicles, biofuels and carbon capture and sequestration (CCS), the country still requires crude oil.

She noted that Indonesia—a country of 283 million people spread out across 17,000 islands—faces its own logistical challenges, including developing a smart grid. And, currently, 80% of the energy supply is comprised of fossil energy that is “more reliable compared to renewable energy, especially solar and wind,” she said.

“There is no scalable energy that can replace the fossil energy,” she said. “So we have [the] same objective, but each country [has] a different starting point. So we can say that we have one finish line to be achieved, but we are now [at a] different starting point.”

Carlos Travassos, chief engineering technology and innovation officer at Petrobras, pointed to the stark differences between developed countries’ consumption of energy compared to poorer nations, as well as the 1 billion people globally without access to affordable energy.

“The concept of economic poverty is strongly linked with energy poverty,” he said.

In Brazil, Petrobras last year paid government taxes of $56 billion, he said. Over the past five years, the company has delivered $1 trillion through taxes, dividends and payouts to other stakeholders, he said.

“When you think about transition … the government must be prepared for this sort of money [to] disappear,” he said.

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Rethinking energy amid volatility

Dramatic oil price volatility has made each country rethink its energy strategy as well.

Widyawati said Pertamina’s responsibility to Indonesia is to maintain energy security, “whatever the price.”

But the company has shifted more toward investing to increase its own upstream production so the country can be self-sufficient and avoid the risk of price volatility. 

Pertamina also started to ramp up agricultural drilling to provide more bioenergy for its portfolio to “reduce the demand on energy supply in gas, oil,” while also reducing carbon emissions.

Travassos said Petrobras’ response to commodity price swings has been to build up its energy resilience.

“We must be resilient in terms of carbon footprint, and resilient in terms of price,” he said.

He said the search for oil is a “crazy business” in that exploration has no guarantees.

“We have no idea what we're going to find, if we we're going to find it, or what's the price,” he said. “So there is no another way to be [than] resilient.”

Inácio agreed that resilience was the right approach, along with diversifying Sonango’s energy mix and portfolio. The company is adding solar power to its system and has an investment in biofuels through a partnership, he said.

“Working toward diversifying the portfolio and the energy mix will definitely help us in getting more resilient in dealing with the price volatility,” he said. “We’re getting there and I think the results will show up.”

Peak oil by 2030?

Panelists also expressed skepticism regarding recent commentary by Fatih Birol, IEA’s executive director, who wrote in the Financial Times that “oil demand is on course to peak before 2030.”

The answer to the question may depend on the market or region where a company is operating, Travassos said.

“If I have to answer … I do not believe so, but that's the point,” he said.

Widyawati said she, too, had a different point of view based on the current situation.

“We predict that the energy demand, as well as oil demand, will still be increased, [driven] by aviation and also the petrochemicals,” she said.

Inácio said he didn’t agree, based partly on UN projections that the world population is set to reach 10 billion people by 2050.

“There are studies showing that by 2050, at least 50% of the energy needed will still be met by fossil fuel, the decarbonized fossil fuel,” he said. “So I don't think we'll get there yet … [by] the next decade.”

Inácio added that he was looking forward to seeing the studies and data behind Birol’s assertion.

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