Navigating the new normal

In an exclusive interview with Chris Van der Beek, Becht Director of European Operations, Asian Downstream Insights learns more about the company, fuels of the future, and the significance of an empowered workforce in navigating a post-COVID economy.

Before we begin, tell us a little more about Becht.

Becht is a family-owned large service provider for refineries and the petrochemical industry, as well as power plants and the nuclear industry. We have been around for 57 years, providing engineering solutions in all disciplines, plant services like project and TA assurance and support, and supply chain and margin optimisation solutions to our clients.

There’s so much innovation happening in the oil & gas sector – before we dig into your outlook on the sector and what’s on the horizon, could you tell us how you got involved in the industry and your current role at Becht?

I am a process engineer from Technical University in The Netherlands and worked 30 years with Shell in Downstream Assets and Projects Operation and Support, before starting with Becht in June 2020 as Regional Director for the Europe, Middle East and Africa region. My current role comprises of growing the current client base and establishing a regional pool of consultants.

Going forward, what’s your outlook on crude oil?

As a precursor to the growing petrochemical business, crude oil will last longer – it’s the balance between the gas to new energies, and the growing need for energy in the world that keeps crude oil as an energy source alive even if usage is expected to shrink by 2050.

Petrochemicals will account for more than a third of global oil demand growth to 2030 and nearly half through 2050, predicts the IEA. What does this mean for Asian refiners? How can they meet growing demand for petrochemicals in the post-COVID world, while also achieving more stringent sustainability objectives?

The growing demand for petrochemicals means that refiners have to make strategic choices in the oil and chemical sector, adapting to become a profitable petchem-feed producer in growing volumes. They also need to ask themselves this: To what level do you want to stay, and how big a player do you want to be in the petrochemical market?

For Asia, what do you think post-pandemic recovery is going to look like?

Strategically, we expect challenges in the way of investing, divesting, or maintenance – this ensures the balance in flexibility and product diversification. There will be a low carbon marine impact, and greenhouse gas mandates can be expected to steer investments.

Good asset strategy is required, as well as end-of-life assessments for aging units. The future is going to be lively, with a need for effective capital investment and in new assets.

2020 has produced exceptionally low levels of M&A. With hopes of COVID-19 vaccines and an increase in energy demand as well as pressure/opportunities from transition what are your expectations for M&A levels in Asia in 2021? How can investors take advantage of the emerging opportunities in these markets?

With vaccines being rolled out, we all hope that recovery from COVID-19 will steadily increase in pace, and that energy demand will recover and grow, especially within the APAC region. We have seen large IOCs announcing their steps in aiding the energy transition, sometimes due to pressure from society, shareholders, and even the court of law – these divestments are opportunities for other investors.

The energy transition will also require collaboration between industry players, government bodies and other new technology providers to make it happen, and I am confident that we will see this trend pick up in speed over time.

Speaking of the energy transition, how can refiners effectively capture its benefits?

I think refiners need to find their balance in transforming towards newer sources of energy like biofuels, and work on reducing their carbon footprint while making sure they maintain efficiency and efficacy in keeping the market share for fossil fuels for as long as they exist.

Refiners need to have an eye toward the future, and prepare for their next steps in embracing the energy transition – be it in renewables, biofuels or petchem feedstock.

For example, when you consider carbon capture technologies – CCUS technologies as we know them – you need to take into account the fact that you need specialized knowledge in CO2 capture, transport, and storage. You also need partnerships and agreements with the government, which is out of the box for many refiners. These all need to be taken into consideration when you think about the future.

What will the fuels of the future be, and what will it take for them to displace the fuels of today?

We expect a significant change of 6-10% globally, for automotive technology to make the shift towards electricials and later on hydrogen, with biofuels as one of the intermediate solutions as well. All this will require the direction, support and financing of governments and other regulatory bodies, which will set the pace towards this transition.

Hydrogen seems destined to play a part in the energy plan of tomorrow. How can operators best prepare for this?

Look for opportunities to integrate with other parties in making green or blue hydrogen, and look for optimal use in existing assets or exports to reduce the carbon footprint.

Companies have observed that one of their main challenges in the energy transition is a lack of skilled staff. What can operators do to empower their workforce and better prepare for the energy transition?

Companies and operators should continue to invest in key knowledgeable staff, and make full use of parties like Becht, who can train staff – and help them stay knowledgeable – to keep them competitive.

Companies face mounting pressure from their stakeholders, governments and society – and sometimes even the court of law – to continuously become more sustainable. You need to be well-informed about the strategy the company will be taking, so as to make the right plans and execution at the right moment in time. This, I think, is a key priority for executive boards in companies.

Lastly, for the post-pandemic era, what should be the main priority for operators to survive and ultimately thrive in this new normal?

Operators must ask themselves these four questions:

1. Do you have a point of view to manage the energy transition?
2. Do you have a strategic plan to take advantage of this transition?
3. What will you do to keep your public and investment license to operate?
4. Can you respond quickly, effectively and decisively?

A lot of competitiveness can be gained by executing projects flawlessly, preventing process safety incidents and minimising the delay in commissioning and start-up time, preventing the loss of huge revenue numbers. This is what it will take to survive in the new normal.