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Expert: Oil majors' 'agnostic' future may lead to investment in battery minerals

Global oil majors' moves in recent years points to an "agnostic" future of energy production that could conceivably include owning or investing in battery minerals extraction companies which would be "small CapEx" compared to their usual spend and well within their capabilities, Deloitte's global LNG leader said.

BP PLC was the latest oil super-major to secure a foothold in the infrastructure needed to power electric vehicles when it invested US$20 million in "ultra-fast charging" battery developer StoreDot Ltd. — a trend for which Deloitte has just expanded its preparation with the June 8 appointment of Australian CleanTech founder John O'Brien as a renewable energies partner within the firm's Energy, Resources & Industrials group.

Deloitte Financial Advisory Managing Partner David McCarthy said in a June 8 statement that "the combination of a changing regulatory environment, investor focus and emerging technologies is presenting both enormous challenges and opportunities for any company that provides or uses energy."

Deloitte's Perth-based Partner and Global LNG Leader Bernadette Cullinane told S&P Global Market Intelligence on the eve of O'Brien's appointment that "there is definitely a convergence of oil and gas companies' capabilities with the future of new energy, including minerals and battery technologies."

"Oil and gas companies are known for their technical prowess, the ability to invest in risky things and engage with joint venture partners and bring a lot of financing to the table, and for being at the forefront of technology and managing large, complex projects," she said. "As the new energy future unfolds, I believe that oil and gas companies will be very well positioned to bring those skills to new forms of energy, whether that be the minerals side for batteries, or into renewables and/or into hydrogen, which was a topic that came up a lot at the recent Australian Petroleum Production and Exploration Association conference."

Oil majors preparing for transition

Cullinane noted that oil majors from North America to Europe to Australia have already embraced the energy transition and "doing things to help themselves get ready," though the rate of change and the impact that will have on a traditional oil and gas company is "still unclear."

Australia's largest oil and gas company, Woodside Petroleum Ltd., announced plans in 2017 to install a microgrid with a 1-MW lithium-ion ABB PowerStore Battery energy storage system on its offshore Goodwyn A platform on Western Australia's North West Shelf.

Total SA has invested in U.S. solar panel manufacturer SunPower Corp. and has committed to making 20% of its portfolio a "low-carbon business" by 2035, and fellow European oil major Statoil ASA has rebranded as Equinor, getting rid of the oil part of its name and refocusing on low emissions and investing heavily in offshore wind, expecting to invest 15% to 20% of total CapEx in "new energy solutions" by 2030.

"Royal Dutch Shell PLC has set up a New Energies business to focus on new transportation fuels and power generation and will also be investing around US$1 billion to US$2 billion a year for the next few years, which is a substantial amount, albeit a small percentage of their total CapEx," Cullinane noted.

"They're making significant commitments not just in investing in new technologies but also working to net zero emissions of the total life cycle of its products by 2070," she said. "Oil and gas companies can become agnostic energy providers of energy solutions, and they can certainly participate in all parts of the value chain."

"Energy agnostic" was a term that has become commonplace in Australia's energy lexicon since Prime Minister Malcolm Turnbull's Feb. 1, 2017, address to the National Press Club in Canberra, where he said "the next incarnation of our national energy policy should be technology agnostic. It's security and cost that matters most, not how you deliver it."

Oil companies are also reaching out to other players across the energy supply chain to potentially aid future investments.

Australian Mines Ltd. Managing Director Benjamin Bell revealed to this in May when revealing that it was through conversations with oil companies contacting him for market research on the electric vehicle and batteries markets that had led to the ASX-listed junior secure off-take for all of the nickel and cobalt from its SCONI project with Korean oil company SK Innovation Co. Ltd.

Cullinane said it is easier for upstream companies who focus on the exploration and development side of oil and gas to move downstream but harder from a "company culture perspective" to move from downstream back to the upstream.

She also noted that mining was "already in the DNA" of some oil companies, particularly in the case of Exxon Mobil Corp., which had a uranium recovery facility in Wyoming in the 1970s.