Rystad Explores Energy Transition Supply Chain Trends

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Experts from Rystad Energy delved into these critical topics including the energy transition, the challenges faced by supply chains, and the delicate equilibrium between sustainability, material security, and affordability.

Representing part of Rystad Energy’s Energy Transition Marathon, the panel, titled ‘Pedal to the metal – enough material to supply the growth?, took place on Tuesday May 9 and featured renowned experts including Audun Martinsen, Head of Supply Chain Research at Rystad Energy; Astrid Valderhaug, Senior Consultant at Rystad Energy; and Dr. Pratima Rangarajan, CEO of OGCI Climate Investments.

Leading the discussion on the supply chain, Martinsen’s opening remarks highlighted the essential factors for a successful supply chain, including access to resources, skilled labor, efficient processing, and proximity to manufacturing plants and end markets. However, he noted that the current setup of supply chains for resources like oil, gas, and lithium is not ideal, with resources and processing often located in different countries. To optimize a low carbon supply chain, localization becomes necessary but also costly.

Addressing investments for the growth of different sectors, “Our prognosis for this year is that oil and gas will grow closer to around 15-16%, where upstream is up 13%, with midstream investments driving at nearly 40%. When it comes to the downstream sector, oil is more flat,” said Martinsen.

He further emphasized the significant investments pouring into the market for low carbon sectors such as offshore wind, solar, carbon capture, and hydrogen. Regarding materials, “We are now seeing low carbon steel demand growing rapidly at a much higher pace than what we see in oil and gas in addition to all other industries,” he said, adding that “Even though we have a lot of additional supply now coming from China, what the low carbon market requires, especially offshore wind, is quite unique services that will be a challenge to deliver on the short term.”

Speaking on the demand for materials in the renewable and battery sectors, Valderhaug mentioned steel, glass, aluminium, copper, and cement as materials required by the energy sector, all of which have established value chains with large capacities. Regarding battery materials, she highlighted lithium, cobalt, graphite, and nickel as the most crucial materials, with lithium being the leading one. The reliable, affordable, and sustainable mining of these materials is vital for long-term supply.

“Australia has proven to be the hero of the story about lithium supply,” said Valderhaug, adding that “They started out in 2016 with 0 mining and have been able to up their supply to almost 400,000 tons during the six years up until 2022.”

She also highlighted other countries like Argentina, China, and Chile as major contributors to short-term growth, with the United States, Canada, Zimbabwe, and Brazil expected to increase their supply in the approaching years.

Meanwhile, Dr. Rangarajan highlighted several areas with potential for emissions reduction, stating, “I think that methane emissions from sectors like oil and gas, coal and landfills are easily largely fixable, maybe not 100% but close because we know areas where they have been fixed and we have the technologies, we have the solutions.”

She further emphasized the importance of energy and resource efficiency, along with the utilization of carbon capture, renewables, nuclear, and hydrogen technologies to achieve significant emissions reductions.

When discussing oil and gas climate initiatives, Dr. Rangarajan noted that she is not aware of coal companies focusing on reducing carbon emissions. However, she mentioned that their initiatives have found replication in other sectors such as cement, aircraft, and plastics. OGCI has collaborated with cement companies and adopted some of their technologies to support emissions reduction efforts.

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Onur Yilmaz

Onur Yilmaz