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“Co-Development Opportunities with Oil & Gas and Renewable Projects”

Introduction

The world is witnessing an energy transformation towards clean and renewable energy sources. This transformation is driven mainly by digitalization and innovation, According to numerous estimates, the proportion of renewable energy sources of the global energy consumption could reach 15 to 20 percent by the middle of the 21th century.

The reasons behind this transition include mainly concern of diminishing producible volumes of hydrocarbon resources (due to reduction of exploration activities and narrowing number of hydrocarbon basins with “easy” and conventional resources), the obligations to follow Kyoto protocol and Paris agreement on reducing carbon dioxide emissions (as a by-product of hydrocarbon production and fuel utilization) signed by many countries, and the tensions from environmental groups.

Companies progressing with “Co-development” philosophy are incorporating the production of renewable energy into their portfolio ventures; investing into startups in the renewable energy field; or developing their own research and development centers in the relevant area.Myriad of opportunities as well as limitations do exist when a company is developing “well known” hydrocarbons and “lesser known” renewables simultaneously.

Review of oil majors investments in renewables :

2.1. Royal Dutch Shell

Shell mentioned a new energy investment budget of US$ 200 million per year; this was revised to up to US$ 1 billion per year at the Cambridge Energy Research Associates (CERA) week in March 2017 and further hiked to US$ 1–2 billion per year in December 2017.

2.2 Chevron:

Chevron launched a Future Energy Fund, with an initial commitment of $100 million, to invest in breakthrough technologies that enable the ongoing energy transition to a greater diversity of sources to lower carbon emissions while supplying reliable, affordable, and cleaner energy.

2.3 Total:

In September2017, a 23% stake in the French renewable company Eren, which holds a diversified asset base of more than 650 MW in wind, solar, and hydro, was acquired for $286 million with an option to buy it outright after2021.Simultaneously, Total fully acquired the French energy efficiency leader Green Flex.

In 2018, Total took 25% stake in Clean Energy Fuels Corp for $83 million to drive de-plowmen of natural gas heavy-duty trucks and to support the launch of an innovative leasing program to place thousands of natural gas heavy-duty trucks on the road.

2.4 ENI

In2015, Eni established a dedicated energy solutions department to identify and implement renewable growth opportunities. In the same year, Eni established a venture capital fund and since then engages in joint research with a number of universities to conduct research and development of promising renewable technologies and applications. The company recently formed partnerships with GE (in 2016) and with Statoil (2017) emphasizing

its growing interest in renewable energy, including offshore and onshore wind Enid’s three-pillar corporate strategy includes renewable energy as an integral part and targets to deliver 1 GW (175 MW by 2018, 320 MW by 2019, 463 MW by 2020, and1 GW by 2021) of installed renewable power capacity over the 2018 to 2021 business plan period by investing EUR 1.2 billion.

BP

BP was the first oil major to commit significant capital to renewable energy, showing high dedication towards renew-bales from 1980 to 2010 with activities in component manufacturing(solar) as well as project development (solar and wind). The company launched a $200 million campaign in 2001 to re-brand BP into Beyond Petroleum, highlighting its early envisioned transition to new sources of energy. In 2005, BP established BP Alternative Energy to consolidate its low-carbon business activities.

In 2018, BP made three investments to prepare for a low carbon future. First, the company invested $20 million into Store Dot, the Israeli developer of rapid-charging batteries. In a move following Royal Dutch Shell's New Motion purchase (see above). Second, BP made a $5 million in-vestment in Freeware, a US company developing fast-charging infra-structure for electric vehicles. Thirdly, BP bought Charge master, the UK's leading network of charging points, for more than $160 million to combine Charge master’s 6500 charging point’s network with its 1200 petrol stations and to hedge against technologies that could challenge the dominance of oilas a transport fuel.

3. Conclusion

We can divide Oil and gas company strategies regarding the energy transition as follows:

1. The oil and gas company integrates renewable energy companies into its company. Thus, creating “interoperate diffusion” of technologies, policies, and strategies between two types of entities.

2. The oil and gas company allows renewable energy projects run independently of hydrocarbon production, whereby the parent oil company is only concerned about financial wellbeing of the organization. Technological exchange in this case is limited.

3. The oil and gas company establishes its own Research and Development center on renewable and invests into it for serving its vision.