‘The Energy Trilemma’
Thank you, Matthew.
It’s great to be in Baku once again and I’m honoured to participate in the 27th staging of this important industry conference.
bp also has a milestone to celebrate this month.
30 years ago - in June 1992 - our company arrived in Azerbaijan and opened its first office in Baku.
Over the past three decades, in partnership with the Government and our co-venturers, we have had the privilege of contributing to the development1 of the Caspian Sea as a modern oil and gas province.
It’s been a remarkable journey – and it’s a great example of what can be achieved when government and industry share a common purpose. What about today and the next few decades – the topic of this panel?
We live in difficult times.
Two years of pandemic have brought a huge toll on humanity. And it has left the world economy weaker.
It has also raised important questions about the pace and reach of globalisation.
The heart-rending situation in Ukraine is having terrible, tragic consequences that are impacting millions of people.
And all over the world, businesses and households are dealing with energy shortages, record prices, market volatility, supply chain disruption and widespread inflation.
Meanwhile, the threat of climate change has not gone away.
The current crisis situation has reminded us – if we needed reminding – that we don’t just need cleaner energy.
We also need it to be secure which means reliable.
And it also needs to be affordable.
We call this the ‘energy trilemma’.
And as a consequence of both the pandemic and the situation in Ukraine – I believe that we will see two things going forward:
What does that mean for companies such as bp?
Two years ago, we set ourselves an ambition to be a net zero company by 2050 or sooner and to help the world get to net zero.
To get there, we announced a new strategy – to pivot from an international oil company focused on producing resources to an integrated energy company focused on delivering solutions for customers.
That means providing the hydrocarbons the world needs today – with lower emissions – while at the same time – investing in accelerating the transition.
By 2030, we expect around 50% of our global capital to be in non-hydrocarbon businesses.
That doesn’t mean leaving oil and gas behind – far from it. The world will need oil and gas for decades to come.
But the current crisis in world energy calls for a renewed focus if we are to address the energy trilemma.
First, we need to improve supply security by getting more molecules (and electrons) to key markets.
For example, in response to market signals, we’re moving LNG cargoes from our global portfolio into European terminals.
And we’re increasing the flows of pipeline gas from Azerbaijan via the Southern Gas Corridor to Europe.
Second, we need to find ways to keep downward pressure on the costs of supply as we tackle the issue of affordability.
That’s about operating excellence – such as the world class 99.6% plant reliability achieved last year in the Shah Deniz field here in the Caspian last year.
And it’s about applying the best of technology – such as our new Azeri Central East platform that is under construction in Azerbaijan and will be fully operated from onshore from Day 1.
And thirdly, it also means we must continue to identify and invest in the material steps required to reduce CO2 and methane emissions.
These are all key parts of what we call resilient hydrocarbons.
At the same time, we are stepping up bp’s investments in our five transition growth businesses: bioenergy, EV charging, convenience, renewables and hydrogen.
Here in Azerbaijan, we are already exploring a range of opportunities including a 240 MW solar plant opportunity in Azerbaijan’s liberated territories and plans to team up with SOCAR for development of potential new renewable energy projects.
And just after this session, we will witness the signing of a 2-million-dollar social investment contract to establish a new higher education programme at Azerbaijan’s State Oil and Industry University aimed at developing the next generation of regional engineers specialising in renewable energy.
So, our role may be changing but it has never been clearer.
We are focused on delivery.
On delivering the oil and gas the world needs today.
Reliable, secure, affordable - and with lower emissions.
While at the same time, investing to accelerate the energy transition.
This is what an Integrated Energy Company can and should do if we are to tackle the ‘energy trilemma’.