Decarbonisation "Needs Oil And Gas", Biofuels Will Be Key

Russia's Sechin and West's oil CEOs agree: the current transition strategy is "unrealistic"

They call for the process to be "inclusive"

And bioblends could become paramount

November 17, 2021 by Patricia Sendin

A decarbonisation plan in the oil and gas sector is underway, but it’s difficult, capital-intensive and will take a very long time. What’s more, it needs the support of global governments and civil society. Biofuels, and in particular bioblends could help in the process. This is what emerged from a forum in Verona, Italy, where key oil and gas players convened to discuss the future of energy.

“Even in the long term, renewable energy will not be able to completely replace conventional energy sources”, Igor Sechin – CEO of Russia’s oil giant Rosneft – said in a panel discussion, while Neil Chapman, Senior VP of ExxonMobil, explained how biofuels and integrated refineries are part of their “flexible strategy” to decarbonise.

ExxonMobil's biofuel research

Scheduled shortly ahead of COP26 and G20 Summit, the XIV Eurasian Economic Forum largely addressed the global oil and gas crisis and looked for answers to a crucial question: with more than 80% of global energy demand still met by fossil fuels and climate change largely driven by energy production, how is the energy sector going to decarbonise in a timely manner without massively slashing energy production – which would greatly disrupt the way we live?

Russian oil and gas companies, international oil companies, commodity traders, supply chain managers and ministers used the opportunity to voice their frustration with the current energy transition strategy. They think that the strategy is unrealistic and is the cause of the current energy crisis. As a way forward, they called for an inclusive energy transition that sees hydrocarbons as part of the transition. Together, all energy producers would work towards becoming low-carbon.

Rosneft CEO Igor Sechin at keynote during the XIV Eurasian Economic Forum in Verona. Photo by Roscongress


At a keynote speech, Rosneft’s CEO Igor Sechin conveyed that oil and gas are still very much needed despite the current narrative stating the opposite. He argued that as we stand – with 84% of the global energy coming from fossil fuels and 11.4% from renewables – the renewable capacity can impossibly meet the current energy demand. Phasing down fossil fuels without having properly ramped up renewables, he said, would negatively affect the supply of energy and lead to shortages. This would require consumers to drastically reduce their energy consumption, which, in his view, is a violation of human rights.

In support of his prediction, he cited a 2021 low-carbon forecast by the International Energy Agency that assumes a carbon neutral scenario in 2050 with conventional energy sources still meeting 39% of global demand (fig. 5).

Bernard Looney, CEO of BP, and Neil Chapman, Senior VP at ExxonMobil, both concurred and confirmed that their respective companies will keep focusing on hydrocarbons “for a long time”. Mr Chapman explained Exxon’s decision by arguing that “oil is the energy carrier that produces the lowest price per barrel, with the lowest carbon footprint with more efficient and clean operations” – a statement that the gas sector later claimed for themselves.

Ivan Glasenberg, former CEO of Glencore – the multinational commodity trading and mining company – added that shutting off hydrocarbons is not the way to speed up an alternative. “This way of reasoning is as delusional as stopping the Encyclopaedia Britannica in the hope to discover Google,” he said.

Former Glencore CEO Ivan Glasenberg. Photo by Roscongress


On the subject of low-carbon energy, Mr Sechin elaborated at length and stretched the importance of adopting a comprehensive approach that includes the entire process chain when assessing the carbon intensity of any energy technology, as well as the safety for people and the environment. The assessment has to be fair and transparent, he concluded, and the same level of scrutiny has to apply for all energy technologies.

Nuclear, hydrogen and hydro all challenge, in his view, safety by posing environmental hazards due to residue disposal, explosion risk and flooding requirements respectively. Wind and solar, on the other hand, increase their carbon intensity when assessed over their full life cycle. The raw materials needed for their production, for instance, generate high emissions at extraction and processing, with rare-earth metal neodymium used for wind turbines having 50 times the emissions of steel (fig.2). Furthermore, wind and solar infrastructure has a shorter life than gas plants (fig.3.); it has high end-of-life disposal costs (30 times higher than regular disposal for solar) and high land requirements. Mr Sechin also warned about potential turf wars arising from the concentration of raw materials in a few countries.

Extracts from Igor Sechin's keynote "The Need for Structural Changes in the Economy and in Future of Energy" at the XIV Eurasia Economic Forum Verona

If renewable technologies have till now benefited from competitive prices – thanks to years of subsidies, Mr Sechin noted – this could end as soon as we start a massive ramp-up of renewables. Such scenario would lead to higher raw materials demand which will affect prices in the commodity market and lead to the next commodity supercycle, Mr Glasenberg said (fig.1). In addition, a supply chain disrupted from years of underinvestment wouldn’t be able to increase transportation capacity, confirmed Jeremy Weird, CEO of commodity trading and logistics house Trafigura.


Underinvestment has been caused by uncertainty on regulation, unilateral sanctions and divestment policies and it has affected oil and gas production. With a shortage in oil and gas, their price and the balance of the entire energy industry have both been affected. The EU gas crisis is an example of it.

Trafigura's Weir sees governments playing an essential role with the many signals they can send to create security and increase confidence such as regulatory credibility and investment in infrastructure. At the same time, Igor Sechin sees the end of the current narrative on oil and gas as a necessary step to allow investment to flow again.

In any case, without investment the oil and gas sector would neither be able to keep up with supplies nor to decarbonise. The hydrocarbon investment gap by 2030 has been estimated at $600bn by JP Morgan (fig. 6). The provision of long-term contracts would be another way to secure investments.

In sum, the sector pleaded for the energy transition to be "balanced, economically sound and socially responsible. It must be synchronized with supply of energy, reliable supplies of metals and other materials, technological development, and the adjustment of consumer behaviour."

Carbon capture, utilisation and storage facility (CCUS). Photo by International Energy Agency


Although the oil sector has a plan to reduce Scope 1 and 2 emissions by reducing and managing the emissions from production and transportation, a plan to reduce Scope 3 emissions, i.e. emissions from burning oil and gas, seems outstanding.

Lorenzo Simonelli, CEO of American oil company Baker Hughes, explained how they are (1) reducing emissions by transforming operations, including the elimination of flaring; (2) investing in digitalisation that allows remote testing in fields; and (3) looking at the composition of fuels. In his view, carbon capture and storage (CCS) is not financially viable.

Conversely, ExxonMobil is investing in carbon capture and is allegedly successfully implementing it in Australia. In addition to CCS, ExxonMobil's decarbonisation strategy includes clean operations, hydrogen, and the aforementioned biofuels generation that they process in their integrated refineries (scope 3 emissions mitigation).

With some mention of emissions reductions from operations and transportation, Rosneft CEO Sechin mostly expanded on their management of carbon emissions. He advocated for carbon offsets – using and increasing the carbon sink potential of Russian forests by planting trees, notably 9.3 million in 2021 – and carbon storage in depleted oil and gas fields.


While oil was somehow referred to as a transition fuel, gas was understood by the majority to be able to become a low-carbon fuel deemed to be part of the post-2050 low-carbon scenario. Only a few saw gas as a transition fuel till biofuels enter the scene.

Foreign Minister Mohammed Al Thani from Qatar – the world’s largest exporter of liquefied natural gas (LNG) – fully endorsed gas as the key energy source able to guarantee a smooth transition to a net-zero 2050. He revealed how Qatar is pushing the gas (LNG) upward trend by heavily investing in LNG and increasing gas capacity by 50% through its sovereign wealth fund – the Qatar Investment Authority. For him, striking a balance between climate change and demand side is essential to deliver a successful energy transition.

Victor Zubkov, chairman of the board of directors of Russian public gas company Gazprom, concurred that gas is the most environmentally friendly energy source.

Leonid Mikhelson CEO of Novatek – the largest independent gas producer in Russia – explained how they are decarbonising gas even further at the Yamal LNG facility (picture above) with one of the lowest carbon intensity per ton of LNG produced in the world. This, Mr Mikhelson explained, will be topped by the state-of-the-art Arctic LNG 2 project and the LNG Construction Center in the Murmanks Region. To turn their low-carbon LNG into zero-carbon fuel, Novatek uses carbon capture, utilisation and storage (CCUS) to produce blue hydrogen and ammonia, a fuel and a fertilizer for intensive agriculture also used to decarbonise carbon projects.

As per Mr Mikhelson, gas projects require big investments that can only be facilitated through long-term contracts. Spot market contracts cannot and will not enable the development of the technologies required to decarbonise gas. These technologies are: clean gas transport, downstream operations, CCUS and especially digitalisation which is crucial to blend gases and increase system efficiency including send and receive remote instructions. Digitalisation hasn’t happened yet due to underinvestment in the sector, he said.

Frontline Waste Partner Patricia Sendin. Photo by Roscongress


As a partner at Frontline Waste – a company that provides award-winning biofuels-from-waste technology – I surely believe in the importance of biofuels for decarbonising. I knew little though about the role of biofuels for the hydrocarbons sector and to find out I've joined the Verona Forum.

I've learned that the sector is in for blending bio-oil and -gas with the respective fossil oil and gas mixes – thus making bioblends. The enabling infrastructure such as integrated refineries and digitalisation is partly on its way. This, for now, is as good as it can get, and exciting news.

Patricia Sendin is partner of Frontline Waste.