“Equinor Will Become A Leading Global Player in Renewables to Support the Energy Transition” – Christel Kvalvik

By ogrepublic Last updated Sep 24, 2022

The Energy Republic talks to Christel Kvalvik, Managing Director of Equinor Nigeria Energy Company Limited, about the company’s action plans to unlocking new opportunities around the energy transition. Christel also provided an update on Equinor’s involvement in Tanzania’s $30 billion LNG deal.

Interview by Ndubuisi Micheal Obineme

TER: Welcome back to the post-COVID-19 era. Please could you shed more light on Equinor’s main building blocks in navigating the pandemic?

Christel: In 2021, the Covid-19 pandemic showed signs of being less severe. However, there continues to be uncertainty around the duration and extent of the impact of the Covid-19 pandemic. Equinor’s operations and workforce, including projects under development, have and continue to be impacted by the global Covid-19 pandemic. Quarantine rules, travel restrictions, workforce shortage, supply chain disruptions, and Covid-19 prevention and mitigation controls, such as social distancing requirements and reduced utilization of offshore beds, have resulted in lower activity levels on certain sites, causing delays, cost increases, and disruption of further work.

As a consequence, the start-up of projects (Njord future, Johan Castberg, and Peregrino phase 2) have been postponed.

In addition, certain of our suppliers and customers have and continue to be impacted by the spread of the pandemic, and the efforts to contain it, and may as a result explore invoking contractual clauses such as those involving force majeure. There can be no assurance that the ongoing Covid-19 pandemic, new variants, and efforts to contain the virus will not materially impact our operations or financial condition.

TER: Equinor has set a target to become a net-zero company by 2050, with a new investment focus on onshore and offshore renewables as part of its energy transition plan. What are the growth and project opportunities in Equinor’s Energy Transition Strategy?

Christel: Equinor is applying its competitive advantage to create value in new areas of the energy system. A central element in this effort is our goal to become a leading global player in offshore wind. We will accelerate growth in renewables to strengthen our competitive position and achieve the economies of scale necessary to improve returns. To build a competitive wind portfolio, we are applying our experience in technology, innovation, and project delivery and building new competence and capacity to support the transition. We have the ambition to have a total of 12-16 GW of installed net renewable capacity¹ by 2030 – five years earlier than previously announced.

To put that in perspective, this would equal more than twice the total global offshore wind capacity installed in 2020. We have already accessed around two-thirds of our growth ambition through a competitive and high-quality pipeline anchored by our Dogger Bank and Empire and Beacon Wind projects in the UK and US. As we execute on these world-class projects, we are well positioned to grow our presence in markets where we look to continue to create value and optionality.

As we expand our global wind portfolio, we are also moving into regions, such as Eastern Europe and East Asia, where there is potential for our renewable projects to displace coal from the electricity mix. Throughout our expansion into renewables, we will continue to be guided by a focus on capital discipline, value creation, and delivery.

Based on our outlook, we plan to allocate around 23 billion USD gross CAPEX to renewables between 2021 and 2026 and expect a real base project return of 4-8%. In addition to our investments in offshore wind, we are expanding into other areas of renewable energy. Our significant equity ownership stakes in Scatec, a leading renewable power producer, and Noriker Power, a UK-based battery storage developer focused on utility-scale storage, are some examples.

Equinor Ventures, our corporate venture arm dedicated to investing in ambitious early phase and growth companies, has a mandate of 750 million USD, with more than 50% of the fund’s capital being deployed towards renewables and low carbon activities by 2025. The current portfolio comprises more than 40 investments, with an almost even split between oil and gas, renewables, and low carbon solutions.

TER: What role will offshore renewables and carbon capture (CCUS) play in Equinor’s global operations more especially in the Northsea?

Christel: We are applying our decades of CCS experience to reach our ambition of developing a CO₂ transport and storage capacity of 5-10 million tonnes by 2030 and 15-30 million tonnes1 by 2035. Since 1996, we have safely stored nearly 20 million tonnes of CO₂ at our Sleipner field. In addition to our technical experience, we are capitalizing on the competitive advantage of our established geographic footprint. Our North Sea infrastructure lies close to potential carbon and hydrogen markets. The Northern Lights project, which we are developing with our partners Shell and TotalEnergies, is an essential step. Northern Lights is part of the full-scale Norwegian Longship CCS project, the first ever cross-border, open-source CO₂ transport and storage infrastructure network. It will offer companies across Europe the opportunity to capture and store their CO₂ safely and permanently underground.

Beyond the NCS, we are pursuing CCS projects in other regions that have the necessary framework conditions for low carbon solutions. In the UK, we are part of the Northern Endurance Partnership, which aims to put in place the offshore infrastructure to transport and store CO₂ from projects in the UK’s pioneering East Coast Cluster (ECC). The ECC, which was selected in 2021 by the UK government as one of its first two carbon capture and storage projects, has the potential to transport and securely store nearly 50% of all UK industrial cluster CO₂ emissions, equaling up to 27 million tonnes of CO₂ emissions a year by 2030.

TER: Talking about the global energy transition agenda, please could you provide more insight on Equinor’s action plans toward Decarbonization, Digitalization, and Decentralisation?

Christel: Hydrogen offers a low and zero-carbon solution to sectors that are technically difficult to decarbonize, such as heavy industries including steel and cement; and transport sectors such as heavy duty trucking, shipping, and aviation. Because of its versatility, most credible low carbon scenarios include significant deployment of hydrogen. Pursuing a technology-neutral approach to hydrogen development will enable the fastest and most cost-efficient decarbonization across sectors and regions.