In the sights of climate change, refineries and traditional companies in the petroleum sector, in general, are committed to the efficient use of their processes to be part of the energy transition. In this context, they emphasize that a regional integration will only be possible if governments offer “long-term” State policies.
ISSUE 110 | 2022
Given the urgency for an energy transition, petroleum companies are forced to make their processes more efficient and also participate in the production of renewable energies, to contribute to the reduction of greenhouse gasses.
In addition, they see an effective regional integration as necessary, in order to promote the development of countries, and on the other hand, as a mechanism to achieve a solid energy transition. However, they recognize that this aspect is directly related to the internal policies dictated by each national government, which in some cases, can be limiting for projects with large objectives.
As part of the monthly edition of the ENERGÍABolivia magazine colloquium, three professionals from the petroleum industry analyze the challenges that the energy transition poses to their sector, the political panorama of the region, and the implications of a regional energy integration. The guests were: Alex Benavente, from Chile, who is Tracerco’s business manager of downstream USA, a Johnson Matthey company, based in Houston, Texas.
Diego Ballesteros, Colombian, chemical engineer, specialized in project management, who is in charge of developing businesses for clients such as Ecopetrol, the Colombian state oil company; and, Yamile Wilches Novoa, Colombian, specialist and senior consultant in the hydrocarbon industry and manager of Sebastopol S.A., a private refinery that is in full development in Colombia.
BEST TECHNOLOGY
According to Mr. Benavente, there are three pillars that all companies consider for energy transition: the first one, the need to increase the efficiency of their processes, not only in terms of economics, but also in the use of resources, where the premise of “buying less and use more’’ gets momentum. This implies improving technology and incorporating new technologies.
The second pillar, follow the path of integration to clean energies. “While you can’t have 100% renewables, you can aim to reduce greenhouse gas emissions from oil and gas processes” he said.
The expert also considers, as a third pillar, the integration of computing technologies, the internet of things and the integration of digitization, which have a positive impact on the realization of more efficient processes, as well as a remarkable impact on businesses’ financial metrics.
“The efficiency of the processes, the integration of renewable energies and digitalization are going to foster an energy transition towards cleaner energies, not completely, not in all places at the same time, but that is where the trend is going,” he pointed out.
CLEAN PROCESSES
Yamile Wilches highlighted that Colombia is a country that is closely aligned with international policies and multilateral agreements, with regard to the reduction of CO2 emissions, so that petroleum processes and projects, such as the Sebastopol’s Refinery, must also meet such demands. “It is essential to align each and every one of these processes in the production of fuels and, of course, the Colombian refinery Sebastopol has implemented a series of technologies for energy efficiency. As a matter of fact, it is the first private refinery to be built in Latin America focused on energy transition, and transformation of these processes, in order to produce clean fuels,” she said.
The expert pointed out that Sebastopol is a conventional energy refinery, but it was designed with high standards in order to reduce CO2 emissions. The company also has a series of units to produce renewable energy, such as a green hydrogen plant for vehicular use, another for liquid ammonia and a photovoltaic energy section.
NEW OPPORTUNITY
Diego Ballesteros considers that this is a time that offers the entire energy sector the opportunity to grow, while having a healthy coexistence with the environment and society. “The challenge of transition must be seen as an opportunity to discover new ways of having renewable energies, in a region rich in resources, such as Latin America,” he said.
At a corporate and business level, he emphasized that there is also the opportunity to identify new technologies, as is happening in Colombia, where its refineries in particular are contributing significantly by acquiring the best technology in the industry to reduce emissions and decarbonize, thus advancing in the transition process.
POLITICAL LANDSCAPE
Colombian experts agree that the new government of their country has given positive signs, both in its campaign and in its speech, to follow the path of energy transition, giving incentives to companies in the energy sector to make investments.
According to the manager of Sebastopol, Colombia is a rigorous country in terms of environmental policies, and has a series of agreements to comply with. Additionally, she said that the Colombian government offers several incentives, among them, for photovoltaic plants or non-conventional energies, and also in terms of hydrogen, to stimulate investment in this kind of project.
From the corporate perspective, there is a vertical integration, that is to say, the petroleum companies are turning from being petroleum companies towards energy companies…”
“We, as a refinery, feel comfortable with the Colombian contractual regulation and we have aligned our projects as required by the regulation. There are a number of incentives for the industry when it comes to incorporating new technologies as well as to reducing CO2 emissions,” she said.
Diego Ballesteros remarked that “talking about the political context regarding the petroleum sector demands a lot of responsibility”, highlighting that in Colombia and until now, the speech that the Government has handled has been “accurate” since this has environmental, economic and social implications.
“What we have read is that the concept is to grow in the transition, to decarbonize the economy hand in hand with social policies such as, for example, tourism,” he said, referring to strategies that allow, gradually, to compensate the drop in foreign currency inflows from the hydrocarbons sector, looking also at the immensity of natural resources in the region, “which can be exploited not only from an extractive philosophy, but also from a sustainable coexistence approach and constructiveness”, as a way of lowering the price of energy and leverage development, in line with a State policy.
On the other hand, Benavente considers that, almost in general, the ideological vision of Latin American governments hinders foreign investment and energy integration in the region.
“The ideological vision that the current governments have in Latin America is unfortunately marking a setback, like two steps forward and one step backwards. This curtails consistency in long-term public policies”, stated the Chilean expert. According to Benavente, the ideological predominance over financial or commercial principles prevents countries, specifically governments, from planning long-term projects, such as gas pipelines or transmission lines, which require heavy investment. In addition, there are countries in which the influence of social groups, such as environmentalists or indigenists, is stronger and slows down or puts up many barriers to the execution of projects.
Regarding private investment, Benavente said that it is also attracted or repelled, depending on the governments’ speech and the levels of economic and legal guarantees offered.
Regarding energy integration, he pointed out that there are two components, that of the countries and that of the companies. “On the company side, there is vertical integration, that is, the petroleum companies are turning from being petroleum companies to being energy companies, because this change allows them to integrate not only petroleum processes but all renewable energies, and that is viable both in public and private companies”. He regrets that in this context, the potential for energy integration that could exist between some countries, such as Bolivia and Chile and/or Brazil and Argentina, is often hindered due to ideological dynamics rather than financial or economic logic.
“The means and resources for integration are planned in a region that has great potential to build a collective good…”
Mentioning various integration initiatives in the region, the analysts agreed on the importance of strengthening them, avoiding ideological polarization, and ensuring that petroleum and renewable energy projects that promote an energy transition must be governed by State policies, and not by the ideologies of governments in power, “with a long-term clarity”, to achieve important objectives in relation to the environment, society and companies.
“The means and resources for integration are planned in a region that has great potential to build a collective good, based on relationships of trust,” said Diego Ballesteros.
