The role of partnerships

Partnerships are an integral part of the operation of today’s oil and gas industry. The industry tends to share risks in areas where the costs are higher, which is why there are typically many partners in large offshore oil fields or LNG terminals. It has also created numerous bodies to deal with industry-wide issues of environmental performance, such as the OGCI.

Existing partnerships and associations can play a role in promoting some of the strategic responses detailed in this section. For example, methane abatement is a main focus for the OGCI and for the signatories to the multi-stakeholder Methane Guiding Principles group.

There is also ample scope for existing partnerships to spread best production practices: the analysis in Section I underlines that the influence of companies can spread much further than their equity ownership or direct operations. The Majors, for example, hold some level of influence over three times more global oil production than they directly own.

The more testing questions about partnerships come in relation to the development of high-cost, infrastructure-intensive areas such as hydrogen and CCUS. The industry instinct to share risk across different partners is clearly relevant in these areas, but finding alignment among a group of oil and gas companies, on its own, is not going to be sufficient to move them forward. Getting a critical mass will require a broader group, not only from the end users that might use hydrogen or CCUS, but also from across governments, the financial community and society.

In discussions on how to accelerate energy transitions, these types of institutional questions are coming to the fore, especially for the “hard to abate” sectors such as steel, cement, plastics, heavy road transport, aviation and shipping (Victor et al., 2019). There is a clear case for co-ordinated action to steer and accelerate technological transitions in

123 | The Oil and Gas Industry in Energy Transitions | IEA 2020. All rights reserved

these sectors to break the current impasse, in which each set of actors is often looking to others to make the first move.

This is an area ripe for engagement by leading parts of the oil and gas industry. This is especially so, given that the most difficult sectors for energy transitions, listed above, are also the ones in which the oil and gas industry could be instrumental in delivering low-carbon solutions.