Turning black gold green

With an increased focus on sustainability and environmentalism, does the Middle East need to think about rebranding?

It’s one of the biggest buzzwords of today, and you can’t escape it no matter where you look: Sustainability is currently one of the modern world’s biggest social causes and trends, and only seems to be gaining traction. As a trend, sustainability is far from new – modern society may be more familiar with environmentalism from the 1950s and 60s, but records have shown that early civilisations were just as devoted to sustainability and living in harmony with nature.

Perhaps the term was pushed into what some might argue to be infamy, after now-18-year-old Greta Thunberg famously skipped school in 2018, leading a one-person strike to protest climate change. To its credit, though, the Intergovernmental Panel on Climate Change (IPCC) has also been working tirelessly to make sure the world is increasingly aware of the human-induced greenhouse effect, and how sustainability efforts must lead the charge to prevent furthering the risk of abrupt or irreversible climactic change.

Even as the COVID-19 pandemic continues to wreak havoc across the world, companies are facing increasing pressure to prove that they can innovate to promote sustainability. Investors and consumers are now contending with the panic that comes from dealing with the widest-reaching public health crisis the world has ever dealt with, alongside the drumming beat of climate-related issues that simply cannot be ignored or pushed aside any longer.

Seeking sustainability: To change, or double down?

Like many other refiners and industry players, refiners in the Middle East have had to contend with calls to make the industry more environmentally friendly.

Unfortunately, the pressure on the region is only set to grow even more, as importers like Singapore look to pivot away from fossil fuels. In fact, the city-state recently unveiled its Green Plan, which will aid it in committing to its ambitious plan to become a leading regional hub for greener alternatives and achieve net zero emissions as soon as possible, under the United Nation’s 2030 Sustainable Development Agenda and Paris Agreement.

So the question is, how does the Middle East find its balance between demand for petchem products and diversifying the energy mix? As things currently stand, petrochemical projects are expected to account for a whopping 61% of the region’s projects expected to start operations from now till 2025.

Soorya Tejomoortula, Oil & Gas Analyst at GlobalData, says, “Saudi Arabia’s aggressive investments in the petrochemicals sector are part of its 2030 vision plan, where the country aims to reduce its dependence on the upstream sector and diversify into other segments.” This comes as a report from the Global Sustainable Investment Alliance (GSIA) shows how sustainable investments now account for over a third of all assets in five of the world’s largest markets. The industry is in transit, and the Middle East must keep up with shifting global opinions.

Industry experts and leaders have weighed in on the topic, trading opinions and potential solutions. Most countries in the region have also pledged to set new targets aimed at reducing greenhouse gas emissions, and have expressed enthusiastic agreement toward achieving the climate goals of the Paris Agreement.

Toward a circular economy

Some companies have taken to examining their current business models, to see what can be improved upon. Borouge, for example, recently shared with Asian Downstream Insights their concept of circularity, and are re-examining what would be previously dismissed as waste, and what else can be done with these materials.

ADNOC has also announced its cooperation with Japanese companies INPEX Corporation, JERA Co.,Inc., and the Japan Oil, Gas and Metals National Corporation (JOGMEC) – this joint study agreement will explore the commercial potential of blue ammonia production in the UAE.

This foray into cleaner alternatives is not new for the company, which announced earlier this year its plans to advance a world-scale “blue” ammonia production facility in Abu Dhabi.

Says His Excellency Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Managing Director and Group CEO, “This is a significant milestone in the development of our blue hydrogen and ammonia business, building on the UAE’s strong position as a producer of competitive, low carbon natural gas and our leadership role in carbon capture and underground storage.

As we collectively navigate the global energy transition, we believe hydrogen, and its carrier fuels such as ammonia, offer promise and potential as zero-carbon energy sources.”

Ammonia: Fuel of the future?

Ammonia has been touted as a possible answer to the call for sustainability in the industry, thanks to its ability to capture, store and ship hydrogen in its emission-free fuel cells and turbines. Blue ammonia is made from nitrogen and “blue” hydrogen derived from natural gas feedstocks, with the carbon dioxide by-product from hydrogen production captured and stored.

What’s more, is that blue ammonia might just be a stepping stone towards “green” ammonia, which can be achieved by harvesting byproduct from entirely green fuel methods.

Only time will tell if the Middle East’s black gold is set to turn blue – and eventually green – but definite steps have been taken, and if nothing else, the region has certainly made it clear that it will do what it needs to in order to keep up with the winds of change.