The global landscape of energy is undergoing a monumental transformation, commonly referred to as the energy transitionThis process is not a linear journey; rather, it involves navigating a myriad of challenges, balancing the dual priorities of reducing emissions while sustaining economic growth, and reconciling supply and demand alongside technological development and cost managementAchieving a successful transition demands a stable energy supply and strengthened cooperation among various stakeholders in the energy sector.

Recent insights from the DNV, a leader in risk management and quality assurance, reveal that a substantial 73% of senior oil and gas professionals remain optimistic about their industry’s growth prospects over the next yearThis optimism emerges against the backdrop of a global push for energy transition, driven in part by the painful adjustments that industries are currently experiencing, as well as a heightened focus on energy security.

As Dieter J

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Engel, the CEO of DNV Energy Systems, stated, “The shift towards sustainable energy is inevitable.” The global energy industry is making concerted efforts to decarbonize and electrify operationsMany companies already possess the necessary technologies and are actively working to fulfill commitments outlined in the Paris Agreement, reinforcing confidence in their ability to drive meaningful change across the globe.

However, this transition is fraught with complicationsDNV’s analysis highlights that rising costs and supply chain disruptions have emerged as pivotal barriers to progressFurthermore, the renewable energy sector grapples with outdated regulatory frameworks and the intensifying pressures of market competitionA significant shortage of skilled workers in the electrical power field is further complicating efforts toward a digital transformation within the industry.

Although there remains a positive vision for energy sector transformation, these challenges have led to a detectable decline in the outlook for specific segments such as electric power and renewable energy

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For instance, the proportion of respondents who are optimistic about developments in the electric power sector dropped from 87% to 76%, while attitudes towards the future of renewable energy fell from 87% to 78% within the same timeframe.

In the context of recent turmoil, particularly following the energy shortages witnessed in 2022 and the ensuing record profits in the oil and gas sector, major global players are recalibrating their strategic approachesCompanies are now formulating ambitious energy transition goals alongside optimizing traditional oil and gas investments, all while aspiring to create a secure, clean, and affordable global energy system.

Take Shell and BP for example; both companies, once noted for their aggressive transition stances, have revised their oil and gas output targetsShell has pivoted from its earlier plans to reduce oil production by 1% to 2% annually, opting instead to stabilize its oil output while ramping up natural gas production

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BP has similarly reduced its planned oil and gas output cuts for 2030 from 40% to 25%. According to BP’s CEO, Murray O’Grady, the company is pragmatically adjusting to shifts in global energy demand.

Meanwhile, ExxonMobil is concentrating its efforts on acquiring and developing offshore oil and gas assets in Guyana and the Permian Basin in the United States, with a staggering $60 billion spent on purchasing Pioneer Natural ResourcesTheir 2023 production levels reached 3.738 million barrels of oil equivalent per day, marking an increase of 1,000 barrels compared to the previous yearChevron has also invested $53 billion in acquiring Hess Corporation, enhancing its position in both Guyana’s offshore developments and domestic shale gas operationsIn 2023, Chevron reported a 7% rise in production, reaching a record 3.12 million barrels of oil equivalent per day.

From a superficial glance, these strategic pivots among global oil and gas enterprises have yielded impressive financial returns

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Big names like Saudi Aramco, BP, ExxonMobil, Shell, TotalEnergies, and Chevron collectively amassed net profits exceeding $240 billion in 2023, marking a new high for the sectorSaudi Aramco alone boasted profits upwards of $121.3 billion, which has successfully rejuvenated spirits within the oil and gas communityAccording to the DNV report, the confidence index among industry respondents increased from 58% in 2022 to 68% in 2024.

Concurrently, major oil corporations are prioritizing net-zero emissions goals, adopting various measures to curtail greenhouse gas emissionsExxonMobil is electrifying drilling rigs, replacing gas-driven installations, and deploying electric fracturing equipment to mitigate carbon emissions throughout its production processesTotalEnergies allocated 35% of its capital expenditure in 2023 toward low-carbon energy initiatives, particularly in developing low-carbon power technologies

Additionally, Saudi Aramco has engaged in shareholder agreements with the Public Investment Fund (PIF) and Saudi International Power and Water Company to develop solar energy photovoltaic projects in Saudi Arabia, aiming at a combined installed capacity of 2.66 gigawatts.

Despite these advancements, the balance between old and new energy development is fragile, with global spending on energy transition experiencing a deceleration after five years of rapid growthA report from Bloomberg New Energy Finance indicates that the majority of energy companies have opted to downscale their energy transition investments in 2023, with the global oil and gas sector funneling approximately $26.8 billion toward these initiatives — a 17% reduction from the previous year.

This trend has ignited concern among climate activists and green groups, who are pressuring the oil and gas sector to adopt more ambitious climate action agendas

There is a growing sentiment that the current pace and scale of efforts to combat climate change are insufficient to meet the target of limiting global temperature increases to within 1.5 degrees Celsius above pre-industrial levels.

Reports from British media indicate a surge in protest activities centered around annual shareholder meetings of oil companiesEnvironmentalists argue that the recent global energy crisis has led fossil fuel companies to engage in what resembles a "cake-sharing competition" for record profits, yet these companies seem reluctant to reinvest these earnings into clean energy initiatives, preferring instead to double down on fossil fuel exploration while simultaneously rewarding their shareholders through dividends and bonuses.

Faced with mounting external pressures, a critical question emerges: how can oil and gas companies achieve carbon neutrality without significantly sacrificing market share in the fossil fuel sector? Carbon Capture, Utilization, and Storage (CCUS) has surfaced as a preferred pathway for decarbonization within the industry

In 2022, clean energy accounted for half of the investments directed toward energy transition in the oil and gas sphere; however, by 2023, CCUS emerged as a focal point, commanding over 25% of total low-carbon investmentsAccording to estimates from the International Energy Agency, to keep global temperature increases within the 1.5-degree threshold by 2050, approximately 32 billion tons of carbon must be captured, necessitating an increase in annual investment to $3.5 trillion.

Focusing on energy storage, lithium battery technology is increasingly capturing the attention of oil and gas companies as new storage solutions gain tractionExxonMobil has ventured into lithium mining, while Chevron plans to increase its investments in lithium battery venturesChinese oil and petrochemical companies are also accelerating their presence in the energy storage marketFor example, China National Petroleum Corporation has initiated multiple integrated projects involving source-grid-load-storage solutions to power oil fields sustainably