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The transition to low- and zero-carbon projects – interview with Franck Neel, Member of the Executive Board of OMV Petrom

Franck Neel will be one of the speakers at the Budapest Hydrogen Summit, to be held on 10 March.

OMV Petrom, the largest energy company in South-East Europe, announced its Strategy 2030, which reflects the company’s growth plans and its commitment towards the energy transition. Among other priorities, OMV Petrom also aims to become an integrated hydrogen player in the long term.

CEENERGYNEWS spoke with Franck Neel, Member of the Executive Board responsible for Gas & Power about the concrete steps included in the company’s strategy, the role of other low-carbon energy sources (while waiting for the scale-up of hydrogen technologies) and the main potential for hydrogen production in Romania.

“With regards to our strategy for 2030, let me clarify a few aspects,” Franck Need begins. “We embarked on a path to transform for a low carbon future, building the future on the existing foundation. That means that we will use the current assets and capabilities to develop new activities to drive decarbonisation.”

He goes on to say that all the decarbonisation scenarios show that, to achieve the goals of the climate agenda, we need a diverse mix of energy resources and technologies. And this is reflected in the company’s three directions strategy, for which it plans to invest 11 billion euro.

“First, we optimise the traditional business to ensure the security of supply today and prepare the assets for the future. For example, we expect our refinery to run at a utilisation rate greater than 95 per cent, but we will also prepare it for advanced biofuels and hydrogen projects,” Mr Neel explains.

“A second direction is the transition to low and zero-carbon projects. We plan that 35 per cent of the investment budget will finance portfolio diversification. This includes the development of renewables, biofuels, hydrogen, electromobility, natural gas solution for mobility, CCS and CCU projects. When it comes to renewables, we will build this position benefiting from the integration with our Brazi power plant.”

“The third direction,” he adds, “refers to the growth of natural gas. We built our strategy on the pivotal role of natural gas as a transition fuel in the power mix. Gas emits almost 60 per cent less CO2 than coal in power generation and the flexibility of gas-fired power plants supports the integration of renewable capacities into the power system. So, it’s not only about hydrogen, but a mix of solutions. Hydrogen is one of them and has the potential to become, from a product used in some industrial applications, a versatile mainstream solution for the hard to decarbonise segments from industry, transport and energy.”

To enable hydrogen production, OMV Petrom wants to capitalise on Romania’s natural gas and renewable energy potential: this involves blue and green hydrogen that will be used to decarbonise the company’s own operations, other industries and mobility as a feedstock and fuel.

However, it is said that hydrogen will only come into the picture at a later stage, in the second half of the decade.

“Our ambition is to reach net-zero operations in 2050,” reminds Mr Neel. “By 2030, we target a reduction of around 30 per cent in our absolute Scope 1 and 2 emissions versus 2019 and approximately 50 per cent versus 2010.”

“During this decade, we will reduce the carbon intensity of our E&P operations by 70 per cent as we optimise our portfolio and develop Neptun Deep. The carbon intensity of our Refining operations will fall by more than 15 per cent, while in our power operations will decrease by more than 20 per cent.”

He reveals that in 2021, the Group has reduced the intensity of its emissions by 10 per cent compared to 2019.

“At the same time, we are expanding our portfolio by adding new eco-friendly products in the mobility sector and we are capitalising the full potential of natural gas in the power production,” he says.

Earlier in February, the European Commission has approved a Complementary Climate Delegated Act which labels certain nuclear and gas activities as sustainable. The main point is that both nuclear and gas can be taken into consideration only if they help accelerate the shift from solid or liquid fossil fuels, including coal, towards a climate-neutral future.

“Energy transition needs a pragmatic approach,” agrees Franck Neel. “We cannot decouple the energy transition from the consumers or from the economic realities. I believe that the Commission’s decision is good news for the consumers. We need a multi-step approach.”

“Natural gas is the bridge towards a low carbon and net-zero energy system. If gas would have been bypassed by the Taxonomy, it would have meant that we would have ended in blowing up the bridge towards the energy transition. And now, we are all on that bridge!”

“Natural gas can be used successfully as a solution for decarbonisation of different sectors, from power production to transportation,” he continues. “Natural gas ensures the balance of the energy system, which means that an even greater share of renewable energy could be included in the mix. In addition, natural gas power plants emit 2.5 time less CO2 when compared to a coal power plant. Besides, it’s seen as a solution for the decarbonisation of long-distance transportation. For example, LNG solution has 15 per cent less CO2 emissions. In addition, natural gas will enable the hydrogen economy.”

Franck Neel
Franck Neel.

When all the companies are running in the hydrogen race, how can OMV Petrom remain competitive in the hydrogen economy?

“Being an integrated company means that we are present on the entire energy value chain, from crude oil, gas and electricity production to retail,” replies Mr Neel. “This has proven to be effective during market volatilities. We intend to apply the same integrated approach in hydrogen, which will allow us to be competitive in the long run. We look into hydrogen obtained from natural gas, blue or turquoise, but also into hydrogen produced from renewable energy. Hydrogen is a versatile product, and we are looking at multiple end-uses for it, such as decarbonising our own portfolio, working with carbon-intensive industries to decarbonise their operations, providing hydrogen B2B feedstock solutions and last, but not least, using it as an alternative fuel in mobility for our customers.”

In particular, the company is planning to invest approximately 3.7 billion euros for the diversification of its portfolio with hydrogen, recharging power stations for EVs, biofuels, renewables or CCUS.

“For carbon capture and storage and for hydrogen production have put forward a CAPEX frame of around 1.5 billion euros by 2030, which will be invested after the technical and commercial viability is assessed,” Mr Neel says.

“Hydrogen is a versatile product with various (future) applications,” concludes Franck Need. “We see a high potential for its role to be scaled commercially as a raw material in the heavy industry where high-temperature combustion processes are difficult to decarbonise and also in the mobility sector, as an alternative fuel, as an alternative solution for heavy-duty and long distances freight.”

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