Last Update
30 May 2023
What could be the way forward for oil & gas companies in India to be successful in renewable power?
Four key value propositions could be adapted by O&G companies in India for energy transition
Many oil & gas companies globally are well positioned to become leaders in the energy transition. This could be the case with Indian companies as well as their global scales of operations, large balance sheets and cash positions, and their long-standing relationships with energy customers and stakeholders, but also because of their unique capabilities related to offshore projects and sustainable fuel production & transport. Factoring these the oil & gas players can offer distinctive value propositions in the following areas of energy transition:
Offshore Project Development: Oil & gas players with extensive experience in large-scale projects can develop and build integrated projects, including renewables generation and hydrogen and heat production. Additionally, it is observed globally that some bidders for projects provide offers that include heat and hydrogen investments.
Green hydrogen production & transportation: Oil & gas companies in India have already had long history with hydrogen production in their refining and chemical processes. In addition, existing capabilities in gas storage and transportation are relevant for hydrogen production and transportation because of chemical similarities. Further, with the possibility of additionality clause in terms of setting up new renewable plants for dedicated hydrogen use O&G companies can also invest in green hydrogen production especially near port infrastructure in the country.
EV Charging Infrastructure: Players across the value chain, which can include the OMCs (involved in retail and fuel refining) can leverage their existing customer relationships, real estate and fuel stations to set up the EV charging infrastructure in the country along with necessary arrangements for battery swapping as well. This shall ease the availability of fast charging stations in the country and on highways.
Overall Decarbonization Solutions: Pressure on the oil & gas companies to decarbonize has pushed them to develop technical solutions and know-how that can be relevant to other industries across the globe and would be no different in India either. Oil and gas companies can leverage these to offer decarbonization solutions including renewable generation, energy retail, batteries, and carbon capture, utilization and storage (CCUS). Currently in India the industry relies on the fossil fuels and has long-standing relationships with suppliers, its representatives will have strong role to play in terms of offering decarbonization solutions for the country.
Mr. Ravi Shekhar, Director & Head, of Eninrac Consulting says “Off-shore project development, greater investments in green hydrogen production and transportation, harnessing opportunities in scaling EV charging infrastructure & providing for overall decarbonization solutions should be the way forward for oil & gas companies in India. The rise in investments in clean and renewable energy & technologies provides compelling evidence that power markets will continue to change rapidly in the country. To stay ahead of the curve Indian oil & gas companies must be highly strategic and intentional in playing to their strengths. To simply put there is no time to waste and industry just cannot afford to wait and watch for the transition curve what India is likely to follow from conventional to new energies domain. It will be crucial for oil & gas companies to be at forefronts of off-shore wind project development and hydrogen ecosystem creation in order to reduce the cost of electricity and hydrogen thus produced by investing in sustained R&D initiatives.”
Three Strategic Questions : When, where & how need crude answers for O&G companies in India
Oil & gas companies in India aspiring to lead energy transition shall have to somewhat follow the footsteps of global majors like Shell & Aramco and have answer to key set of strategic queries of when, where and how.
Firstly, players need time to investments in sustainable offerings in a way that meets carbon emissions goal on both parameters of current and projected while delivering upon the stakeholder's expectations. Being an early mover in terms of investments shall require confidence that demand will follow – otherwise risks the capital expenditures. On the other-hand playing “catch-up” in new energy markets could affect players abilities to maintain a competitive edge against those that invested “on-time” – which would be subsequently creating risk exposure as CO2 intensive sources of energy are increasingly regulated. Secondly, players also need to choose the value chains and segments in which they’d like to operate. Within power, potential areas for investment by oil and gas players include offshore generation, EV charging, and hydrogen production and development. Each of these has different risk/return profiles, capital requirements, and needed capabilities.
Firstly, players need time to investments in sustainable offerings in a way that meets carbon emissions goal on both parameters of current and projected while delivering upon the stakeholder's expectations. Being an early mover in terms of investments shall require confidence that demand will follow – otherwise risks the capital expenditures. On the other-hand playing “catch-up” in new energy markets could affect players abilities to maintain a competitive edge against those that invested “on-time” – which would be subsequently creating risk exposure as CO2 intensive sources of energy are increasingly regulated. Secondly, players also need to choose the value chains and segments in which they’d like to operate. Within power, potential areas for investment by oil and gas players include offshore generation, EV charging, and hydrogen production and development. Each of these has different risk/return profiles, capital requirements, and needed capabilities.
- Communications Team
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