Oil and gas industry carbon reduction path

CCUS scale potential areas: the representative regions are Northeast, North, Northwest and East China, such as Heiji-Ji-Liao, Beijing-Tianjin-Hebei, Yangtze River Delta, Xinjiang and Shaanxi. These areas are close to oil fields and other high-carbon emission industries, the cost of carbon dioxide transport and storage is low, and it is easy to collaborate with surrounding industries to form economies of scale and reduce capital expenditure, so CCUS is recommended as a priority. For example, Shaanxi's oil refining industry has a synergistic effect on carbon emission reduction with the coal chemical industry, so it can give priority to pilot CCUS scale. We estimate that CCUS scale will result in approximately 20 million tonnes of CO2 reductions per year for the Chinese oil and gas industry.

Electrification pilot representative areas: The representative areas are Central and southwest China, such as Hubei, Sichuan, etc. These areas have abundant clean energy and low electricity prices, which can reduce the cost of electricity for electrification pilots. For example, Sichuan has the largest installed hydropower capacity in China, with a combined installed capacity of 2.5 GW of solar and wind power; Hubei, which has the third-highest installed hydropower capacity in China and a total installed renewable energy capacity of more than 10 million kilowatts, can prioritize pilot electrification. We expect the electrification pilot to reduce emissions by about 2 million tonnes of CO2 per year in China's oil and gas industry.

Strategic areas according to local conditions: for example, Shandong Province, which not only has abundant and cheap electricity from solar and wind energy, can carry out electrification pilot, but also is close to oil fields (such as Shengli Oilfield), which is easy to carry out CCUS scale, so the choice of carbon emission reduction means needs to be discussed one by one and specific analysis.

Inspiration for oil and gas enterprises

Setting goals, the future is here: Deeply understand the impact of national carbon emission reduction goals and macroeconomic situation on China's oil and gas industry chain during the 14th Five-Year Plan period, and explore highly attractive carbon emission reduction opportunities in combination with the current situation of enterprise business and carbon emissions, so as to formulate specific carbon emission reduction and transformation goals in the next 3-5 years, 5-10 years and even to 2050.

Set a strategy, risk and organic: Analyze the risks of traditional oil and gas assets in a low-carbon environment, consolidate and optimize the quality of oil and gas assets, and minimize the impact of carbon reduction on profitability. For oil and gas companies with upstream or downstream assets overseas, it is more important to clarify the local carbon emission level of the enterprise and the possible corresponding carbon tax as soon as possible. For new growth opportunities, it is necessary to determine the key development direction by analyzing the potential income, and formulate entry plans or accelerated expansion plans. For new technologies and new solutions with clear prospects, accelerate the layout, link strategy, operation, market and organization, and win the first opportunity; For disruptive technologies with uncertain prospects (such as controlled nuclear fusion), systematic research is carried out in close solidarity with the ecosystem, and the impact of the next generation of technology on the industry as a whole and the enterprise itself is prepared for the energy future. In the direction of investment strategy, it is necessary to carry out top-down management to ensure that the investment portfolio is closely integrated with the strategic plan, and to clarify the investment performance objectives and management mechanisms to promote the optimization and improvement of asset allocation.

Operation strategy, benefit first: In order to achieve the carbon emission reduction target, formulate specific emission reduction measures at the asset level, calculate its emission reduction potential and return on investment, that is, estimate the economic benefit, investment cost, operating cost and corresponding risk, form a marginal emission reduction cost curve, and find out the most feasible and economical carbon emission reduction path, and actively prepare for participating in the carbon trading market. In daily management, assess the potential impact of climate risks on the company and establish management mechanisms to address climate risks.

Enabling transformation and management support: In order to continuously promote emission reduction optimization in a long-term manner, oil and gas companies have decentralized targets for domestic demand, enhanced transformation capabilities, embraced innovative thinking, and released transformation signals externally. First of all, enterprises should formulate clear carbon reduction targets and milestones at the departmental level to ensure consistent thinking and ensure the implementation of the strategy. Second, improve the transformation capacity of enterprises in all sectors, including the development of high-quality talent management mechanisms, so as to obtain a market-oriented, innovative and international talent pool. Third, make use of organizational structure adjustment and corporate culture upgrade to balance the conflict between new and old businesses and stimulate the enthusiasm of employees for change. Fourth, formulate corporate publicity strategies, reflect the product differentiation of carbon emission reduction, persuade investors, customers and the government to support the emission reduction plan from a reasonable perspective, show the determination of Chinese oil and gas companies to reduce carbon emissions to the international community, and let the public understand the social responsibility practices of enterprises.