Upstream Oil and Gas Industry Agrees to Prioritize Collaboration to Achieve Oil and Gas Production and Decarbonization Targets
JAKARTA, 14 May 2024 - The upstream oil and gas industry faces significant challenges beyond meeting the growing energy demand; businesses are also required to reduce carbon emissions from production operations.
Nicke Widyawati, President and Director of PT Pertamina (Persero), explained that, as a state-owned company, Pertamina is mandated to meet energy needs. Pertamina has even allocated more than 62% of its capital expenditure (Capex) for energy fulfillment programs.
"We want to increase production given the current conditions, but it takes time. However, we are still trying by allocating 62% of our Capex to meet energy needs. Fifteen percent is allocated for our low-carbon business to support the government’s targets, and we have a significant allocation for CCS and bioenergy," Nicke said during the Plenary Session discussion: CEO Forum with the theme "Company Strategy Pursuing High Return of Investment and Helping Society Meet NZE" at IPA Convex 2024 at ICE BSD, Tangerang, Tuesday (14/5).
However, according to Nicke, as a business entity, Pertamina is also required to generate profit. Moreover, the push to contribute to the achievement of Net Zero Emissions (NZE) targets should not be overlooked.
One of Pertamina's steps, according to Nicke, to increase production while reducing carbon emissions is by initiating the application of CCS/CCUS technology.
"We are also prioritizing CCS/CCUS, with a potential storage capacity involving 16 CCS/CCUS projects, 11 of which are managed by Pertamina. We aim to inject CO2 into the CCS block with a volume of 7,000 tons by 2030," Nicke said.
Tan Sri Tengku Muhammad Taufik, President and Group CEO of Petronas, explained that what Pertamina is facing is also encountered by Petronas. The best way to address these challenges is through collaboration. Petronas has initiated collaborations and partnerships in 20 countries, including Indonesia. The need for collaboration is growing due to the projected significant investment required for energy transition efforts.
"Energy transition requires substantial capital, around US$ 2 trillion. We must collaborate. The time for competition is over. No company or country can do this alone. There must be collaboration," Taufik said.
Roberto Lorato, CEO of MedcoEnergi, acknowledged the high complexity faced by energy companies, especially in the upstream oil and gas sector. Moreover, there is a mandate to implement energy transitions and decarbonization. Therefore, the commitment to implementing ESG within the company is key.
Medco will continue its programs focusing on energy transition through decarbonizing operations by expanding its gas business, renewable energy sources such as geothermal, and solar power plant projects.
"The complexity is indeed high. This energy transition is fundamental and must be pursued, but it requires substantial funds and technology. We maintain everything with our ESG commitment," Roberto said.
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