JANUARY 10 — Conversations about the future of work, industries, and sustainability inevitably come to the fore. Few sectors are under as much scrutiny, and pressure to transform, as the global oil and gas industry.
For decades, oil and gas have energised economic growth, modern conveniences, and national revenues, particularly in resource-rich countries like Malaysia. But with the intensifying call for climate action and net-zero carbon commitments, the industry now finds itself at a historic crossroads, adapt to a low-carbon future or risk obsolescence.
Many may not realise that the industry is more than just the big players like Petronas. The number of oil and gas SMEs is massive. Their future is also at risk unless the industry in total embarks on transformation.
The global energy landscape is undergoing a seismic shift. Climate agreements like the Paris Accord, investor demands for ESG accountability, and the growing competitiveness of renewables have combined to challenge the dominance of fossil fuels.
More than 140 countries, representing about 90 per cent of global GDP, have pledged to achieve net-zero emissions by mid-century.
Oil and gas companies, once considered untouchable economic titans, are now under immense pressure from regulators, communities, and even their own shareholders to realign their business models with this new reality. In response, many international oil companies are actively diversifying their portfolios.
British Petroleum (BP), Royal Dutch Shell, and TotalEnergies have each set net-zero targets, while investing heavily in renewable energy projects, hydrogen, and electric vehicle infrastructure.
Notably, TotalEnergies rebranded itself to reflect this shift, signalling that the days of being solely an oil and gas player are numbered. Our own Petronas is on a similar path.
Some companies are also embracing carbon capture, utilization, and storage (CCUS) technologies, aiming to reduce emissions from existing operations.
Occidental Petroleum’s direct air capture project and Equinor’s carbon storage initiatives in the North Sea exemplify this trend.
Closer to home, Petronas has declared its aspiration for Net Zero by 2050. This includes ventures into solar energy, hydrogen projects, and potential carbon storage hubs.
While commendable, the pace and scale of these efforts must match the urgency of the climate crisis. For national oil companies like Petronas, Saudi Aramco, and Adnoc, the challenge is even greater.
These entities are major contributors to their national economies, and any transition must balance environmental responsibilities with socio-economic realities such as employment, energy security, and government revenue.
Delaying action is no longer an option. As renewable technologies become cheaper and global carbon markets expand, the risk is not just reputational, it’s existential.
Critics argue that much of the oil and gas sector’s net-zero talk is mere greenwashing, with timelines conveniently set decades into the future while fossil fuel production continues largely unabated.
The recent about turn of the US policy defying climate change realities is disconcerting. This is a valid concern. Without transparent, measurable, and near-term targets, ambitious declarations ring hollow.
To gain public trust and social license to operate, oil and gas firms must demonstrate genuine decarbonization efforts within this decade, not the next.
The energy transition is not about eradicating oil and gas overnight. These resources will remain part of the global energy mix for years to come.
The task ahead is to reduce their environmental impact while accelerating investment in cleaner, more sustainable alternatives.
Operational efficiencies through digitalization, investment in hydrogen, large-scale carbon capture, and nature-based climate solutions can provide pathways forward. However, the real transformation lies in mindset, seeing themselves not as oil producers, but as holistic energy providers.
The oil and gas industry have a choice, to cling to the past or to lead into the future. History will remember the companies and nations that had the courage to pivot, to invest in innovation, and to place the planet and people alongside profits.
On this Labour Day, as we honour the contributions of workers, it is timely to reflect on what kind of industries and economies we wish to build for future generations.
The oil and gas sector can be part of that future, but only if it chooses transformation over tradition. The time for action is now.
*The author is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya. He can be reached at [email protected].
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
