By Syed Shukur Ali

CALGARY, Canada, Sept 21, 2023 (BSS) - New uncertainties and differing priorities brought about by energy security concerns will slow down the pace and direction of the energy transition, delegates described at the 24th World Petroleum Congress (WPC).

They said that disruption to energy flows that followed the start of Russia's war in Ukraine created new imperatives for governments and accelerated an agenda of energy nationalism, whereby countries and regions look for ways to protect their energy supply.

"But the priorities around energy security can differ significantly between countries, and between energy producers and importers, leading to "schisms" that are affecting the world's approach to tackling climate change and the energy transition," Raad Alkadiri, managing director for energy at Eurasia Group, said the audience here yesterday (Sept 20) here.

Energy security will mean different things in different markets, he said: "In the US, it's cheap gasoline. In China and India, it's the availability and cost of energy. In Saudi Arabia, it's about security of demand."

These starting points, which inform decision making and political action, are at odds with each other and end up affecting the transition focus and direction of travel, said the analyst.

"These priorities will determine where governments allocate capital and the signals they give to the market," Alkadiri told Upstream in Calgary. "Capital allocation will flow in different directions" towards sectors that are not complementary, he added.

He gave the example of Saudi Arabia and other major oil producers, which are approaching the transition from a "clean up the barrel" standpoint, driving efficiency in operations and reducing the carbon intensity of their upstream production.

The European Union and local governments are pushing to re-shore energy supply through the ramp up of renewables, while moving away from imported fossil fuels.

"These differences make reaching a consensus harder and, with that, there is a missing political leadership to drive the transition," he said.

This vacuum in leadership, while the industry requires investment to achieve scale and drive down costs, will open up a gap that financial operators - rather than governments - would have to fill, despite financiers being especially risk averse.

"Financial markets will be left to determine availability of capital and cost of access to capital," said Alkadiri, who said this is arguably the "largest challenge" to achieve transition objectives.

Besides, Indonesia has a plan to become one of the world's leading liquefied natural gas (LNG) exporters.

"Indonesia appreciated the proposed growth in its LNG sector through the large Abadi (Abadi LNG Terminal, also referred to as the Masela LNG Project in Indonesia) export scheme and potential new projects such as the Andaman scheme,' Director General of Oil and Gas of Indonesia Tutuka Ariadji said.

Ariadji presented Indonesia's carbon capture and storage credentials, Ariadji told that Indonesia is pleased with the progress being made on Abadi, and is fully supportive of LNG export plans being proposed by Harbour Energy in the Andaman area.

"If Andaman progresses, it could potentially leverage off the unused throughput capacity at the nearby Aceh LNG facility. Harbour's Andaman II permit contains the large Timpan gas discovery, and Harbour is poised to start a multi-well drilling programme to build more resources for the project," he added.

He said that the Indonesian government supports Harbour's ambitions to develop an LNG scheme, and he was optimistic that Andaman and Abadi would not be the last new LNG developments for the Southeast Asian nation.

The country has good remaining gas prospectivity, including interesting plays in the western region where BP, among others, is formulating exploration plans, he described.

He said there are more than 60 production sharing contracts in Indonesia where there has been no exploration drilling.

The BP-led Tangguh CCUS project is the most advanced, with first injection planned in 2026-2027, said Ariadji.

"The Abadi project also has a CCUS component.
Indonesia is aiming for a 30% reduction in carbon emissions by 2030, and moving to net zero by 2060," he added.

Meanwhile, Brazilian drilling player Foresea has secured a new contract with Petrobras for one of its drillships to continue working for the state-controlled oil giant offshore Brazil.

Foresea clinched a new $400 million rig contract with Petrobras and drillship Norbe VIII expected to start a new charter in the third quarter of 2024.