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PwC dialogue: the growing
significance of NOC renewable
energy strategies
The growth of renewable
energy in the Middle East
could transform the energy
supply and business
development opportunities
open to national oil companies
(NOCs). There is increasing
recognition that, just as these
countries are ‘oil rich’ so they
are also potentially
‘renewables rich’. In the run
up to this year’s World
Petroleum Congress, PwC has
been conducting a dialogue on
the role of NOCs in relation to
renewable energy.
Paul Navratil, PwC’s Middle East Energy
and Utilities Leader, points out: “NOCs are
not the first companies that are top of
mind when you think about renewable
energy. But the reality is that many are
getting involved in potentially significant
ways. The NOCs have played the lead role
in exploiting the abundance of
hydrocarbon resources. Many of them are
also well positioned to take a lead in
exploiting their country’s renewable
resources.”
NOCs in the Gulf Cooperation Council
states are often called upon by their
governments to undertake strategic
projects which benefit the country at large.
Renewable energy is a case in point and, as
Navratil points out, “strong capital project
management skills, experience in
delivering large scale strategies, and their
sheer influence on the overall economy
make them the natural custodians of such
initiatives.”
The immediate impact of renewable
alternatives to gas and oil fired power
generation is to free up oil and gas for the
more valuable export market, reduce some
countries’ dependence on gas imports and
diversify the energy mix to increase energy
security. In terms of NOCs’ own
operations, renewables provide
sustainable, low carbon options for their
power needs. It is clear also that some
energy policies in the region have much
wider strategic ambitions for renewable
energy. For example, Saudi Minister of
Petroleum, Ali Al-Naimi, has said: “Saudi
Arabia aspires to export as much solar
energy in the future as it exports oil now.1”
1
2
Solar is the most abundant renewable
resource but some areas also offer
significant windpower opportunities. Many
leading NOCs have established internal
capacity to develop their renewables
activities. Saudi Aramco, for example, is
building a team within its power systems
organisation to develop renewable energy.
It is reviewing a range of options including
scalable renewable projects, technology
selection, local manufacturing options and
the business case for wind and solar
energy. Qatar Petroleum has established a
renewable energy unit within its strategic
planning unit to keep a watching brief on
renewable energy and its possible
development in Qatar.
In Kuwait, the Kuwait Petroleum
Corporation established new technology
arm, KPC Energy Ventures, in 2006 to
actively pursue the development of low
carbon fuels including hydrogen
generation from oil and fuel cell
technology. In 2011, the Kuwait Ministry of
Electricity and Water announced an
ambitious plan to generate 10 per cent of
its electricity from sustainable sources by
20202. This eclipsed the previously highest
2020 target in the Gulf states - 7 per cent
set by Abu Dhabi in the United Arab
Emirates (UAE).
Interview with Reuters, 24 September 2009.
Announced by Eyad Ali al-Falah, assistant undersecretary for technical services, Kuwait Ministry of Electricity
and Water, 25 October 2011.
Speaking with PwC, Dr. Mohammed
Ramadhan, board director and president
of KPC Energy Ventures, says: “NOCs can
play the role of a leader in their country,
encouraging other sectors to explore and
adopt renewable energy to meet their own
energy needs. In Kuwait and generally in
the region, we have a lot of sun for
renewable energy but the regional climatic
challenges such as dust or sandstorms
need to be understood and managed."
The exact approach and role of NOCs
varies from country to country. Whatever
the specific approach, all NOCs have a
keen interest in assessing the right time to
make moves either to introduce renewable
power as part of the supply chain for their
own operations or as a business growth
opportunity. The Gulf states are
experiencing close to double digit growth
in electricity demand per annum. Demand
in the Middle East region as a whole is
forecast to double by 2035 according to
the International Energy Agency3.
3
New gas-fired generation is the main
response to this demand growth but this
means losing a valuable gas export
opportunity or being more dependent on
gas importation. As Dr. Ramadhan
observes: "Just as LNG imports in Kuwait
now help free up crude and products for
exports, renewable energy can play a
similarly vital role in the future." Hannes
Reinisch, a PwC alternative energy projects
specialist in the region, says: “Renewables
appear more expensive at the moment but
they offer a strategic opportunity.
Companies need to have a clear strategy
and the right modelling in place. We’re
entering a period when countries and
companies will want to keep a close eye on
the economics of renewables investment as
technology evolves and the cost base
comes down further.”
‘New policies scenario’ in World Energy Outlook 2010, International Energy Agency.
PwC checklist
Renewable strategies of NOCs
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sustainable, low carbon options for their power needs
solar thermal as a source of process heat for oil & gas activities
wider market growth opportunities
technology development and delivery
support in meeting national renewable energy targets
Contact us:
Paul Navratil
Middle East Energy, Utilities & Mining Leader
Telephone: +971 2 694 2920
Email: [email protected]
Hannes Reinisch
Telephone: +971 2 694 7463
Email: [email protected]
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