Cleaning Up: Oil majors adapt to the new renewables’ reality

Fossil fuels, including oil and gas, have ruled the energy landscape for decades, and have pretty much dictated global economic growth trends. The high dependence of air, road, rail and wa­ter transport, industries and even households on oil and gas for meeting their en­ergy needs has made these fuels some of the most important contributors to the economic development of nations and a core factor in global geopolitics. However, a worldwide push to address climate ch­ange issues, price volatility in oil and gas markets, the linge­ring demand-supply im­balance owing to succe­ssive waves of the pandemic and, most re­ce­ntly, supply chain issues owing to the Russia-Ukraine conflict have changed the energy ecosystem forever.

Clean energy solutions such as solar, wind, biofuels, green hydrogen, storage and electric mobility are now gaining at­tention on the global stage owing to their increasing cost competitiveness and stable long-term prices. These sol­u­tions help reduce countries’ oil and gas impor­ts and ensure energy security for the future. Fu­r­­th­er, large investors have started focusing on expanding their clean energy portfolios and fin­ancing companies in this space. On their part, environment-conscious con­­sumers are opting for electric vehicles (EVs) in place of conventional vehicles, electric furnaces for their industries, and rooftop solar for their homes.

With cost economics and international pr­e­ssure on climate mitigation driving clean energy growth, companies in the oil and gas sector are also redefining their expansion strategies and aligning them with the new reality. These co­m­panies have massive infrastructure in the areas of offshore and onshore exploration, refi­ne­ries, pipe­lines and transport systems, and have en­ergy-intensive operations. Thus, they are ideal sites for clean energy integrati­on. Wi­th the ad­vanced technologies available today, these companies are working to­wards reducing their conventional captive power consumption and even moving to­wards round-the-clock rene­w­ab­le pow­er procurement. Green hydrogen adoption, electric mobility, and carbon capture utilisation and sequestration (CCUS) are oth­er ar­e­as of interest for oil and gas co­m­panies to redu­ce their direct and indirect carbon emissions.

Indian oil and gas majors are also keeping up with the global trends and investing heavily in clean energy to diversify their energy businesses and reduce their climate impact.

This article explores the cle­an energy initiatives and activities of four such Indian companies and the outlook for the future…

Indian Oil Corporation Limited

State-owned energy major Indian Oil Corpo­ration Limited (IOCL) is present across various forms of energy including oil, gas and alternative energy. It is one of the leading public sector companies in India in terms of its gr­een en­ergy initiati­v­es. To make its portfolio gre­ener, the company has been exploring different cl­e­an energy verticals across the solar, wind, storage, electric mobility, green hydrogen and biofuel segments. IOCL expects to meet 85 per cent of the power requirements of the new projects in its refineries through renewable energy. It already has roughly 240 MW of installations comprising 70 MW of solar and 168 MW of wind power as of March 2022. To further in­corpo­rate renewables in its energy mix, IOCL recently established a joint venture (JV) company with NTPC through which it plans to meet the extra power requirements of its refineries by utilising round-the-clock renewable energy of up to 650 MW by end 2024.

Moreover, the company has been promoting solar power deployment at its retail outlets, with 1,166 such establishments having already been solarised. It has also released a few solar power tenders in re­cent months to increase its solar uptake. In June 2022, the company invited bids for the implementation of a 1 MW grid-connected captive solar power project in Jai­pur, Rajasthan. Prior to that, in May 2022, it is­s­ued a request for proposal for consulting services to set up a 2.25 MW solar project at its Jabalpur LPG bottling plant. In September 2021, it floated a tender in two categories to empanel vendors to develop so­lar projects at its various pr­o­ject sites and re­tail outlets ac­ross India.

IOCL is also actively exploring the green hydro­gen option and has made some announ­cements in this regard. In April 2022, it signed a binding term sheet for the formation of a JV company with La­r­sen & Toubro (L&T) and Re­New Power to develop India’s nascent green hydrogen sector. IOCL and L&T signed another binding term sheet to form a JV to manufacture and sell green hydrogen electrolysers. Prior to this, in November 2021, IOCL invited expressi­ons of interest for setting up green hydrogen generation uni­ts at two of its refineries – at Mathura in Uttar Pradesh and Panipat in Har­ya­na. The plants will have installed capacities of 5,000 tonnes per annum (tpa) and 2,000 tpa respectively and will be set up on a build-own-operate basis.

IOCL has been active in promoting the biofuel segment as well. It recently inaugurated a 2G ethanol plant at its Panipat re­finery, which will use rice straw as feedstock. Further, as of July 2022, it has awar­d­ed over 2,374 letters of intent under the government’s Sustainable Al­ternative To­wards Affordable Transportation sc­he­me for compressed biogas. The company is at present marketing compressed biogas from 18 plants spread across the co­untry. Going a step further towards the decarbonisation of transport, IOCL is working to expand the EV ecosystem and targets to set up EV charging stations at 10,000 fuel stations over the next three ye­ars and deploy these in public parking sp­a­ces at airports and tourist centres. Rea­lising the importance of advanced battery technologies in the clean mobility sp­a­ce, it has collaborated with Israeli compa­ny Phinergy Limi­ted to commercialise the aluminium-air battery technology in India.

Oil and Natural Gas Corporation

The largest crude oil and natural gas company in India, the Oil and Natural Gas Corporation (ONGC) is focusing on diversifying into renewable energy sources. It is exploring various op­por­tunities in not just renewables such as solar and wind but also upcoming energy segments such as green hydrogen and green ammonia. The company has set a target of producing a minimum of 10 GW of renewable power by 2040 and has signed several agreements with different companies to expand its clean energy portfolio.

In July 2022, it signed an MoU with Green­koZeroC Private Limited to jointly pursue opp­ortunities in various green energy segments including renewables, green hydrogen and green ammonia. The JV plans to set up more than 5 GW of solar and wind power capacity, whi­ch will be in­tegrated with Greenko’s pum­ped storage facility to ensure round-the-clock rene­wables for gr­een hydrogen generation. Fu­r­ther, in April 2022, it signed an MoU with Nor­we­gian state-owned energy giant Equinor ASA to partner in various clean energy verticals in­clu­ding renewable energy, low-carbon fuels and CCUS. Prior to that, in December 2021, the company sig­n­ed an MoU with the Solar Energy Corporation of India (SECI) to collaborate on renewable energy projects across various segments including solar, wind, green hydrogen, energy storage and the EV value chain.

Apart from these agreements, the company has issued a few tenders in recent mo­n­ths in the solar space, including those for a 15 MWac grid-connected solar power project at its Vagra site in Bharuch district and a 5 MW solar project at its Hazira project site. Further, with the company’s ex­perience in offshore infrastructure projects, it is exploring project opportunities in the offshore wind space as well. It is carrying out a study with NTPC for offshore wind deployment at its vast acreage along the country’s extensive coastline.

Due to the carbon-intensive nature of the oil and gas sector, ONGC is also actively exploring the carbon capture potential to tackle emissions. Thus, apart from its MoU with Equinor, ONGC is working with IOCL to set up a CCUS project. This facility will use the captured carbon dioxide from IOCL’s Koyali refinery for en­hanced oil recovery from the Gandhar oilfield’s depleted reservoir. In addition, ONGC is working on implementing India’s maiden geothermal field development project in Ladakh and has signed an MoU with the Union Territory of Ladakh and the Ladakh Autonomous Hill Deve­lopment Council in February 2021.

Bharat Petroleum Corporation Limited

Bharat Petroleum Corporation Limited (BPCL), one of the top oil marketing companies in In­dia, is moving towards greener energy sour­ces and plans to become a net zero company by 2040 in Scope 1 and Scope 2 emissions. To this end, the company has signed an MoU with SECI to build 10 GW of renewable energy ca­pacity by 2040, spread across the solar, wind, electric mobility, hydrogen, and waste-to-energy segments. It has also recently signed agreements with the state governments of Uttara­khand and Odisha to de­v­elop the renewable energy sector in these states. Further, to incorporate renewables at its refineries, the company has recently issu­ed a tender for setting up a 14 MW grid-connected solar power project at its Bina refinery in Madhya Pradesh on a turn­key basis and is also working in the bioethanol and compressed biogas segments.

With its large pipeline infrastructure and experience in the oil industry, BPCL is actively exploring opportunities in the gr­een hydrogen space. In July 2022, it invited bids for a 5 MW electrolyser and as­sociated system that can be used for the production of green hydrogen and blending of hydrogen with natural gas in the city gas distribution (CGD) network. BPCL plans to blend green hydrogen with natural gas in the Ahmednagar and Auranga­bad CGD networks. It has also partnered with the Bhabha Atomic Rese­arch Centre to scale up the alkaline electrolyser technology for the generation of green hydrogen. Further, in November 2021, BPCL an­no­unced plans to set up a green hydrogen plant at its refinery in Bina.

With growing traction in the EV space, BPCL is investing significantly in setting up EV charging infrastructure across the country. In April 2022, it announced plans to invest Rs 2 billion in this space. BPCL will set up 100 fast EV charging corridors with 2,000 stations al­ong the busiest 100 national highways in this fiscal year. In February 2022, the company la­un­ched its first EV charging corridor along the Chen­nai-Trichy-Madurai highway. The second co­rridor is coming up on the Kochi-Salem section of National Highway 47 and the third corridor on the Mumbai-Bengaluru highway. The company has plans to offer EV charging stations at around 7,000 energy stations over the next five years. It has al­ready signed an agreement with auto­ma­kers such as Hero Motors and MG Mo­tors for collaborating in this space and with Bounce Infinity for partnering in the nas­ce­nt battery swapping space.

Reliance Industries Limited

One of the largest Indian multinational con­glo­merates, Reliance Industries Lim­ited (RIL) is pr­esent in many diverse businesses including en­ergy, petrochemicals and natural gas. Recently, the company forayed into the clean energy space in a big way. RIL has set an ambitious target of achieving net zero carbon emissions by 2035 and is working towards establishing itself as a top contender in various clean energy verticals including renewables generation, solar module manufacturing, en­ergy storage, green hydrogen and fuel cells, and electric mobility.

RIL is building the massive Dhiru­bhai Am­ba­ni Green Energy Giga Com­plex, spread over an area of 5,000 ac­res, in Jamnagar. This will be among the lar­gest integrated renewable en­ergy manufacturing facilities in the world and will have four gigafactories: an integrated solar PV module factory, an advanced battery en­ergy storage factory, a green hydrogen electrolyser factory, and a fuel cell factory. In Oc­to­ber 2021, RIL announced its plans to generate 400,000 tonnes of green hydrogen us­ing about 3 GW of solar energy at its proposed electrolyser giga­factory in Jamnagar.

RIL is pursuing its renewable and clean en­er­gy initiatives mainly through its wholly owned subsidiary, Reliance New Energy Solar Limited. It has made a series of acquisitions in recent mo­n­ths to give it a head­start and establish it­self as a leading player in the clean energy spa­ce. Some of its recent investments and acqui­sitions are REC Solar, Faradion, Lithium­Werks, sky­Tran, Ambri, Sterling & Wilson, NexWaf and Stiesdal. A renewable energy project management and construction division and a renewable energy project finance division are also being set up by the company.

RIL has proposed extensive investments in Gujarat over a span of 10-15 years to set up a 100 GW renewable energy power plant and for green hydrogen ecosystem development to make the state net zero and carbon-free. It is also scouting for land for a 100 GW renewable energy pow­er project in Kutch, Banaskantha, and Dho­lera in consultation with the Gujarat go­vernment. With its extensive experience in the oil and gas sector, the company is also planning a massive foray into green hydrogen and plans to achieve a $1 per kg cost of green hydrogen in one decade, also known as the “1-1-1” target. As a new entrant, it has made considerable headway in the solar manufacturing space and has been selected as a beneficiary under the production-linked incentive scheme for solar panel manufacturing.

Further, Reliance BP Mobility Limited (RBML), operating under the brand Jio-bp, is a fuel and mobility JV between RIL and bp, which provides advanced mobility solutions and alternative fuelling optio­ns to its customers in addition to marketing conventional fuels. RBML sets up EV charging points and battery swapping stations through collaborations with customers such as real estate companies and ho­me delivery platforms, as well as with automakers such as TVS Motors, MG Motors and Mahindra.

The way forward

India has witnessed massive growth in the renewable energy space and has been an investment hotspot for many local and foreign investors including traditional oil and gas companies. Thus, apart from domestic players, ma­ny international oil and gas giants have made sizeable investments in the growing clean energy sector in India over the years. For instance, British BP’s in­vestment Lightsource BP has be­en a long-term financier in India’s clean en­er­gy sp­ace. Similarly, Malaysian company Petronas made its maiden foray into the renewable energy business in April 2019, with the acquisition of Amplus Energy Sol­u­tions Pte Limited. Then, in 2020, Total­Ener­gies acquired a 20 per cent stake in Adani Green Energy Limited (AGEL) and formed a 50-50 JV with AGEL, into which AGEL transferred its operational solar as­sets. Most recently, Shell’s subsidiary Shell Overseas Investment B.V. completed its acquisition of Solenergi Power Private Li­mi­ted and the Sprng Energy group of co­m­panies from Actis.

The increasing investments and initiatives of oil and gas majors in the gr­een energy space point to their long-term intent to clean up this polluting sector. No doubt, oil and gas will re­main a valuable contributor to the overall eco­no­mic progress of any nation and its com­plete phase-out may not be possible in the short te­rm. However, it is encouraging to see that these companies are making serious efforts to adopt clean energy solutions in a big way.