During the Brussels’ debate over the future development of world liquid hydrocarbon market until 2035, Leonid Fedun, Vice President for Strategic Development of LUKOIL, announced that there had been changes in the company's internal structure: «We are witnessing the gradual transformation of LUKOIL into an integrated energy company».
In the field of renewable energy sources, the company's portfolio includes solar power plants in Romania and Bulgaria in addition to four hydroelectric power plants in Russia. At the same time, according to Fedun, the market efficiency of oil production ensures the profitability of alternative energy sources as such. «The cost-effectiveness of renewable energy is only achieved at an oil price of 80 dollars per barrel», says the Vice President of LUKOIL.
According to Fedun, an integrated approach is based on an informed approach to the development of the region. «Our motivation regarding environmental programs is related to the fact that we are a European company: there are four LUKOIL refineries in the EU. Furthermore, Europe is the largest importer of our fuel. Therefore, we feel obliged to meet current trends including climatic ones that exist on the market», Fedun added.
In the presented by LUKOIL overview regarding the further development of the world liquid hydrocarbon market in the context of the transition to a low-carbon economy it is noted that, considering current climate policy and existing programs to improve energy efficiency level, the demand for liquid hydrocarbons will keep growing until 2035.
In accordance with this, the way to achieve climate neutrality is the progressive implementation of energy efficiency programs on industrial facilities.
LUKOIL's refinery in the Netherlands province of Zeeland is one of the industry leaders in this area due to the introduction of a digital optimization system for processing medium distillates (including marine fuel, for which strict IMO 2020 requirements have recently come into force). In addition, one of the largest hydrocracking plants in Europe, part of the refinery circuit, has been updated with an additional reactor to enhance fuel production with increased environmental neutrality.
CCUS and green hydrogen technologies are also used at the refinery, and LUKOIL's further development direction is their implementation on all production facilities that are part of the company's circuit. This can reduce greenhouse gas emissions in annual terms by 3-4 million tons.
Since 2016, LUKOIL's corporate greenhouse gas emissions have decreased by 4.3%. Oil refineries are still accountable for most of them (42%); power generation comprises 32%, and exploration and mining entail 23%.
According to Fedun, climate neutrality in Europe will have been achieved by 2065. In order to reduce the way to complete elimination of greenhouse gas emissions, it is necessary to harmonize the regulatory approaches of all parties to the Paris agreement, Russia and the EU in particular.