Oil majors betting big on biofuels with over 40 projects by 2030

FE Team | Published: November 23, 2024 21:32:44

Major oil and gas companies have ramped up investments in the biofuels sector, betting on sustainable aviation fuel (SAF), with 43 projects expected to be up and running by 2030, consultancy Rystad said in a report.
The energy research firm indicates that investments by industry giants such as ExxonMobil, Chevron, BP, Shell, Total Energies, and Eni could add 286,000 barrels per day (bpd) of production capacity, reports Reuters.
SAF, produced from waste and residue like used cooking oil or organic crops, emits the same amount of carbon dioxide as kerosene when burned. However, it's considered less polluting due to its production from leftovers or plants rather than newly drilled oil, which releases additional greenhouse gases.
The aviation industry accounts for nearly 2% of global energy-related carbon dioxide emissions.
"As the energy transition progresses, these biofuels offer a practical, near-term solution to reduce emissions without requiring significant changes to current infrastructure," said Lars Klesse, analyst of bioenergy research at Rystad.
BP leads the pack with the largest announced production capacity, reaching a combined 130,000 bpd.
Strategic acquisitions, such as BP's purchase of Bunge Bioenergia and Chevron's takeover of Renewable Energy Group, have strengthened oil majors' positions in this space.
Despite its higher cost compared to petroleum-based jet fuel, SAF uptake is gaining momentum. Government mandates are driving investments, with the European Union requiring a minimum of 2% of SAF use in aviation by 2025, and the Biden White House aiming to meet all US aviation fuel demand with SAF by 2050.
OIL SETTLE UP AT 2-WEEK HIGH
Meanwhile, oil prices climbed about 1 per cent on Friday, settling at a two-week high, as the intensifying war in Ukraine this week boosted the market's geopolitical risk premium.
Brent futures rose 94 cents, or 1.3 per cent, to settle at $75.17 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.14, or 1.6 per cent, to settle at $71.24.
Both crude benchmarks were up about 6 per cent for the week, their highest settlements since Nov. 7 as Moscow stepped up its Ukraine offensive after Britain and the U.S. allowed Kyiv to strike deeper into Russia with their missiles.
"The Russia-Ukraine escalation has raised geopolitical tensions beyond levels seen during the year-long conflict between Israel and Iran-backed militants," said Saxo Bank analyst Ole Hansen.
President Vladimir Putin said Russia would keep testing its new Oreshnik hypersonic missile in combat and had a stock ready for use.
"What the market fears is accidental destruction in any part of oil, gas and refining that not only causes long-term damage but accelerates a war spiral," said PVM analyst John Evans.
The US, meanwhile, imposed new sanctions on Russia's Gazprombank as President Joe Biden stepped up actions to punish Moscow for its invasion of Ukraine before he leaves office on Jan. 20.
China, the world's biggest oil importer, announced policy measures this week to boost trade, including support for energy product imports, amid worries over US President-elect Donald Trump's threats to impose tariffs.
China's crude oil imports were set to rebound in November, according to analysts, traders and ship tracking data.
Oil imports also increased in India, the world's third biggest oil importer, as domestic consumption increased, according to government data.