OPINION: Concerns about energy security sometimes seemed to take a back seat when European policymakers shifted their focus toward energy transition.
The UK government saw little for oil and gas companies to contribute when hosting the COP26 climate conference that took place in Glasgow in November.
Influential energy analyst Daniel Yergin levelled a similar charge against policymakers in the world of oil, gas and renewables last week, arguing they have mistakenly seen energy security as a given.
Speaking in China, Yergin, the Pulitzer-winning author of The Prize and vice chairman of IHS Markit, said Western Europe had allowed itself to become far too dependent on one gas-export country, Russia, without thinking about diversification and the relative immaturity of renewables.
Germany’s ill-judged decision to run down its own nuclear power sector had made things worse, he said.
“You risk global energy crises and economic setback, social political turmoil, and we have seen some of that over the past year,” Yergin argued.
He called for more acceptance of the role that fossil fuels play as a bedrock of energy security, with gas in particular playing a key transitional role, including a place for blue hydrogen with carbon capture and storage (CCS).
A new willingness to embrace the role that oil and gas companies play in providing energy security can perhaps be detected.
A decade ago the Mid-Catalonia (Midcat) gas pipeline project linking Spain with France was conceived with the intention of boosting energy security, but the plug was pulled as nuclear-powered France saw little return for the investment.
The long-stalled project has now been given a new lease of life by the same concerns about diversifying gas supplies into Europe and ending reliance on Russia.
Germany, for instance, has reversed its pre-Ukraine war policy and is pressing ahead with at least five new floating storage and regasification units to help end its dependence on Russian pipeline gas.
So is Yergin right?
It may seem common sense to argue there should be an ongoing and constructive role for oil and gas, but many outsiders still think industry has been looking after its own profits before the needs of the planet.
Recent record corporate earnings and big payouts to shareholders have exacerbated mistrust of the oil and gas sector, which makes it more difficult for Yergin’s advice to be implemented.
But the appeal to some sections of the public around binary arguments is equally clear in growing support for environmental groups such as UK-based Just Stop Oil and reflected in viewing such as a new BBC documentary, Big Oil v The World.
Yergin is also keen to trumpet the important role the oil industry can play in CCS, along with boosting wind power and other clean technologies.
But this means winning back public trust by showing the oil industry is not engaged in a form of tokenism where the rationale behind investments in renewables or carbon offsetting is one of public relations.
CCS is a case in point. This is an activity that can clean up industries such as steelmaking, cement and chemicals by abating their emissions.
But critics are wary that this could be a ploy to keep producing more oil.
Energy shortages and price increases may open the door to more balanced discussions about energy security and transition.
In response, the oil and gas industry has to be more careful than ever about investments, payouts and transparency.
(This is an Upstream opinion article.)
