Australia-listed company Oil Search has become the latest traditional oil and gas company to pledge to reach net zero emissions from its operations by 2050.

Oil Search confirmed its commitment to becoming a net zero energy company on Tuesday, with the company’s current executive vice president of sustainability and technology, Beth White, to lead an energy transition review this year.

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Chief executive Keiran Wulff said the aim of the review would be to develop a plan to deliver “tangible and achievable results” to reach the net zero goal.

“Oil Search has long been recognised as a leader in community engagement and betterment,” he said.

“With our new corporate strategy – Focus, Deliver, Evolve – we will strive to lead by example in all areas of sustainability and value.”

He added the net zero target would build upon the company’s commitment in November last year to deliver a more than 30% reduction in its operated greenhouse gas emissions intensity by 2030.

Path to net zero

In order to meet its targets, Oil Search will carry out near term carbon abatement and emission reduction programmes within its existing operated assets.

It has also pledged to align its growth portfolio with the objectives of the Paris Agreement, while it intends to make “prudent” investments to prepare for the energy transition.

This will include investments in advancing the PNG Biomass project — a renewable energy project in Morobe Province that will use wood chips from trees sustainably grown and harvested to fuel a biomass power plant, providing up to 30- megawatts of power to the local grid.

Oil Search claims the PNG Biomass project will offset roughly 3.3 million tonnes of carbon dioxide over 25 years.

The company is targeting a final investment decision on the project later this year, with first power to the grid anticipated in 2024.

Financial results

Oil Search’s pledge to become a net zero energy company by 2050 came as it also revealed a heavy financial loss for 2020 as lower oil and gas prices saw revenues plummet.

Oil Search posted a loss of US$320.7 million for 2020, a steep decline from the $312.4 million profit booked in 2019, with a post-tax impairment charge of US$260.2 million weighing down last year’s results.

However, even taking into account one-off costs, Oil Search’s core net profit for 2020 only amounted to US$22 million, compared to US$320 million a year ago.

The fall in core profit came as revenues tumbled 32%, year-on-year, to US$1.07 billion, as the company’s average realised oil and condensate price fell 41%, to US$37.22 per barrel of oil equivalent, while its average realised liquefied natural gas and gas price slipped 32%, to US$6.49 per million British thermal units.

This offset a 4% rise in production, to 29 million boe, thanks to record production from the ExxonMobil-operated PNG LNG development in Papua New Guinea, with total annual production equivalent to 8.8 million tonnes per annum, more than 25% above the project’s nameplate capacity.

Oil Search anticipates output this year will range between 25.5 million and 28.5 million boe, while total investment expenditure this year will range between US$325 million and US$445 million.