Speaker 1: Hi, I'm Dana Perkins, and you're listening to Switch It
Speaker 1: on the b F podcast. Petro Chemicals are the building
Speaker 1: blocks of countless materials and an essential component of the
Speaker 1: industrial supply chain. They're also one of the largest sources
Speaker 1: of industrial emissions and a growing source of oil demand.
Speaker 1: So how do we bring these emissions down? And what
Speaker 1: are the technologies for decarbonizing? Can we have zero carbon
Speaker 1: high value chemicals and feedstocks? What is it going to cost?
Speaker 1: And what are some of the company strategies. These are
Speaker 1: some of the things my colleagues il Han and c
Speaker 1: C looked at when writing Decarbonizing petro Chemicals Corporate Strategies
Speaker 1: and a second research piece titled Decarbonizing petro Chemicals Technologies
Speaker 1: and Costs. They're both part of a Decarbonizing Industry series
Speaker 1: we've written. Ilhan Savut writes about sustainable Materials for BENF
Speaker 1: and C. C. Tang is an oil and petro chemicals analyst. Here.
Speaker 1: Both of these reports can be read at b NF
Speaker 1: on the Bloomberg terminal, on BNF dot com, or the
Speaker 1: b NF mobile app. A quick reminder, B and E
Speaker 1: F does not provide investment strategy advice and we have
Speaker 1: a full disclaimer at the end of the show. And
Speaker 1: now let's speak with Ilhan and c C about decarbonizing
Speaker 1: petro chemicals. Illan and c C, thanks for joining today
Speaker 1: to talk about petro chemicals. Thanks for having us to
Speaker 1: be here. Thanks DNA. So we're going to get to
Speaker 1: the elephant in the room at a point, which is
Speaker 1: this hundred dollars of barrel. But before we go there,
Speaker 1: let's start with some fundamentals because it's important that we
Speaker 1: all understand what we're talking about here, which is petro chemicals.
Speaker 1: So what are they and what are we talking about today.
Speaker 1: Petro Chemicals consist of mainly ethylene, propoline, and aromatics, which
Speaker 1: we refer to as high value chemicals. So these are
Speaker 1: some of the most diverse materials in industry. They're using
Speaker 1: everything from wind turbine blades, two car seats, pains, detergents.
Speaker 1: Also a massive ndmark it are plastics. So any type
Speaker 1: of finished product that you can think of probably has
Speaker 1: a component that's derived from petro chemicals. So ubiquitous they're everywhere,
Speaker 1: and what is their carbon intensity? So when it comes
Speaker 1: to petro chemicals, there are two issues. One our scope
Speaker 1: po emissions, So essentially the emissions that arise during their production,
Speaker 1: which is mostly done through steam cracking where you take
Speaker 1: some sort of oiler gas based feedstock, you put it
Speaker 1: into a steam cracker where you react that feedstock with
Speaker 1: steam at very high temperatures, and that uses fossil based fuels,
Speaker 1: So then you have a source of seal two emissions there.
Speaker 1: But then there's also another aspect to it, and that's
Speaker 1: because what's and I find it's quite fascinating when we
Speaker 1: talk about the cartonizing petrick chemicals. Um the petro chemicals
Speaker 1: themselves consist of carbon molecules, so they're made of carbon themselves,
Speaker 1: So there are emissions associate did with end of life,
Speaker 1: such as incineration of plastic waste. So there are two
Speaker 1: sources of emissions there. But I think it's just important
Speaker 1: to point out that pet Kim's is one of the
Speaker 1: major imagers among hard to abate sectors, and demand for
Speaker 1: petro chemicals are expected to increase significantly over the coming decades.
Speaker 1: So whatever whichever way you look at it, it's crucial
Speaker 1: that we decarbonize this sector. So the hard to abate sectors,
Speaker 1: these are the ones where we don't have the solutions yet,
Speaker 1: and I guess we'll come to that in terms of
Speaker 1: some of the solutions that are starting to present themselves.
Speaker 1: But even within this class of hard to abate, where
Speaker 1: would you put them? Are they one of the biggest
Speaker 1: concerns or are they one where you feel like maybe
Speaker 1: they're going to make their way off of the hard
Speaker 1: to abate lest soon. In terms of carbon footprint, petcams
Speaker 1: follow cemented steel closely, and I would say that they're
Speaker 1: not as hard to abate. So pet Kim's is a
Speaker 1: bit easier compared to steal and cement. That's actually whatever
Speaker 1: it presents on decarbonizing petro chemicals. That's actually how I
Speaker 1: make the audience feel better is talk about the fact
Speaker 1: that they could be much worse off if they worked
Speaker 1: in the steeler cement sectors. So you're telling me there's
Speaker 1: a chance, I'm sure you may age their movie clothes. Okay,
Speaker 1: here we go. So can we talk about who the
Speaker 1: players are in this space? Would be really useful to
Speaker 1: understand if these are the big oil majors that we know,
Speaker 1: or if this is a really fragmented market. I think
Speaker 1: there are different types of petcam producers. Some oil majors.
Speaker 1: They have their petcam segments, the names we are all
Speaker 1: familiar with, Shell, Exallmobile, and they all have their downstream
Speaker 1: pecam business, so they used their upstream oil and gas
Speaker 1: as feed stock to feed into their petrol chemical facilities.
Speaker 1: And then we have dedicated petrol chemical producers also, I
Speaker 1: think familiar names like BSF and Doubt. They are not
Speaker 1: that upstream into oil and gas, but they are pretty
Speaker 1: focused in petrol chemicals calls from this basic petrol chemicals
Speaker 1: and specialty petrol chemicals. And then we have the end users,
Speaker 1: the consumer brands that use this plastics in their products.
Speaker 1: Il Han mentioned that we are likely to see more
Speaker 1: petro chemicals in various aspects of our lives in the future,
Speaker 1: and this is the potentially growing space within the businesses
Speaker 1: that you've just mentioned. CC. Is this a really growing
Speaker 1: and strategic part of the business and where does it rank,
Speaker 1: I guess in terms of their other business activities these
Speaker 1: businesses look at the future. I think it's very important
Speaker 1: to all these different types of petrochemical companies because we
Speaker 1: have seeing growing demand for petrol chemicals, so everyone is
Speaker 1: investing heavily to boost their capacities, especially for this oil
Speaker 1: and gas companies they are seeing challenges in other segments
Speaker 1: of their business. They have challenges from electric vehicles. They
Speaker 1: are not sell more gasoline as they are now in
Speaker 1: ten years, so they need to find out a solution
Speaker 1: for all the oil and gas they're producing, so they
Speaker 1: or pivot to petrol chemicals. They see it as a
Speaker 1: like solution for when we hit like pick oil, the
Speaker 1: oil demand destruction from electric vehicles. That's certainly a space
Speaker 1: that b ADF does talk about. So let's go to
Speaker 1: the elephant in the room, the thing that I promised
Speaker 1: at the beginning. So we have seen record oil prices
Speaker 1: well over a hundred barrel CC. Can you talk a
Speaker 1: little bit about what it means for the petro chemicals
Speaker 1: industry and ill hand, can you talk about what it
Speaker 1: might mean a little bit on NINT carbonization side. I
Speaker 1: think high oil prices definitely a pain for the petrol
Speaker 1: chemical producers. They are seeing much much higher costs because
Speaker 1: their feedstock, the NAZA and eating they're using are correlated
Speaker 1: with oil and gas price and now we have like
Speaker 1: record prices, so they are taking higher cost and the
Speaker 1: problem here is whether they can pass on this cost
Speaker 1: to their customers. If they can, then that's not a problem.
Speaker 1: They still have their margins. But if they cannot, which
Speaker 1: I'm afraid that's basically the case here in Asia Pacific especially,
Speaker 1: so if they cannot pass on this additional cost to
Speaker 1: their customers, they are bearing this pains of higher feast
Speaker 1: dock cost. The reason why they cannot pass on the
Speaker 1: cost is because that the competition is really high here.
Speaker 1: We have a lot of capacity additions from China, from
Speaker 1: like Asia and also from the Middle East, so we
Speaker 1: have a lot of producers coming into this field. We
Speaker 1: also have relatively weak demand. The producers cannot raise their
Speaker 1: product price alongside with the feast dock price when it
Speaker 1: comes to the decorbonization aspect of things. So, just to
Speaker 1: give some context, pet Kim's players have actually made some
Speaker 1: of the most ambitious net zero targets out there. If
Speaker 1: we compare it to the other hard to abate sectors,
Speaker 1: petcamps put players have actually made the most netser targets.
Speaker 1: So we think that over fifty of petro chemical production
Speaker 1: capacity is un covered by a net zero target right now.
Speaker 1: So all these players that are in this market right
Speaker 1: now that are maybe if if they're integrated players enjoying
Speaker 1: higher cash flows or pure petro chemical players that are
Speaker 1: may be suffering from higher feeds prices. So regardless, they're
Speaker 1: going to have to spend billions of dollars per year
Speaker 1: between now and to decarbonize their asset bass and reach
Speaker 1: those net zero bles. So that's just something important to
Speaker 1: keep in mind. And will discuss a bit more the
Speaker 1: technology options and where the costs are leader, but there's
Speaker 1: no other way of looking at this. This is going
Speaker 1: to require billions of dollars and investments each year going forward.
Speaker 1: Before we do get into those technology things. Let's just
Speaker 1: close off, and you know, we could probably sit here
Speaker 1: and talk about it all day, but for our purposes,
Speaker 1: what are the inputs? What are the primary inputs they
Speaker 1: are going into these high prices for the oil space
Speaker 1: right now because the war in the Ukraine certainly is
Speaker 1: one of them, but we were seeing these prices going
Speaker 1: up before that started. I think the market is was
Speaker 1: already really tight before we have this uh Ukraine walk.
Speaker 1: That is because after like two years into COVID, we
Speaker 1: have seeing like oil demand is getting back to pre
Speaker 1: virus levels, so people are driving, people are even flying more.
Speaker 1: So we have more demand, but on the supply side,
Speaker 1: we do not have enough supply coming either from the
Speaker 1: OPEC producers in the Middle East or from the U
Speaker 1: S show producers. For OPAC, they're gradually lifting up their
Speaker 1: supply for shall they have for the show producers, they
Speaker 1: have more concerns about their supply is coming like slower
Speaker 1: than demands. So that's why we are having like a
Speaker 1: tight market before the war, but now currently with a
Speaker 1: lot of uncertainties around the sanctions in Russia. There's no
Speaker 1: direct sanction on oil, but the oil sector is self
Speaker 1: sanctioning themselves. The ship owners are staying away from Russian
Speaker 1: oil and the refiners are staying away from Russian oil,
Speaker 1: so we have people are worrying we might lose the
Speaker 1: supply from the Russia side, So that's another hit from
Speaker 1: the supply side. Then we are the market is further
Speaker 1: into on balance. I would say, wow, so they're being cautious.
Speaker 1: And you mentioned that flights are resuming. I definitely am
Speaker 1: feeling that I'm seeing people travel worst. I'm glad to
Speaker 1: know that my personal experience is reflective of what we're
Speaker 1: seeing in the market, because that's another thing that I
Speaker 1: know that we track closely is is flights and oil
Speaker 1: demand coming from that? So let's go into this space.
Speaker 1: We've established that petro chemicals are hard to baitsa there,
Speaker 1: that there are some solutions out there, and that it's
Speaker 1: a growing space of growing source of demand going forward,
Speaker 1: both strategically for the company's making them, but also in
Speaker 1: terms of a problem from an emission standpoint. So ill Haan,
Speaker 1: we're going to need to figure out how we fix
Speaker 1: it and where shall we start. What aspects of the
Speaker 1: value chain are these net zero targets. Many of the
Speaker 1: companies that have made them um and you noted that
Speaker 1: they're ambitious. What are they looking to address? Just to clarify,
Speaker 1: they've made these targets for their scope one in Scope
Speaker 1: two emissions. So we'll talk a bit later about Scope three,
Speaker 1: but when it comes to Scope one in scope to
Speaker 1: it essentially comes down to de carbonizing those steam cockers
Speaker 1: that I was telling you about or coming up with
Speaker 1: alternative production processes. So I think that's that's a good
Speaker 1: and simple way of looking at it. So they're kind
Speaker 1: of two groups of de carbonization technology. Is the first
Speaker 1: being modifying the steam cracking process, and then the second
Speaker 1: just alternative commercializing alternative production processes. When it comes to
Speaker 1: the carbonizing steam cockers is there's some of the more
Speaker 1: kind of the usual suspects of the carbonization, so things
Speaker 1: like adding carbon capture and storage, or electrifying the furnaces,
Speaker 1: so instead of combusting those fossil fuels, you instead electrifier
Speaker 1: steam cracker and use resistance heating to get those high
Speaker 1: temperatures of up to a thousand degrees celsius, as well
Speaker 1: as things like changing the type of feedstock you use.
Speaker 1: So for example, if you have a NAFTA cracker, you
Speaker 1: could also switch to bionafta and crack that instead. When
Speaker 1: it comes to alternative production processes, there's a lot of
Speaker 1: movement happening there. Geeks like us tend to be a
Speaker 1: bit more interesting. So there are things like rotodynamic reactors,
Speaker 1: so that's a new furnace design for example, where you
Speaker 1: have a rotor that's just moving in place. It's again
Speaker 1: electrified and it's using the kinetic energy from spraying the
Speaker 1: little NAFTA particles to get those high temperatures. You also
Speaker 1: have other electro chemical processes, for example seal two two chemicals. So,
Speaker 1: as I mentioned earlier, petro chemicals and plastics are made
Speaker 1: of carbon, so you could actually capture use captured carbon
Speaker 1: to make these organic molecules. Now for a very short break,
Speaker 1: stay with us, So new technology innovation. This is definitely
Speaker 1: something that I think is fun for all of the
Speaker 1: nerds out there. So how new are these technologies? Because
Speaker 1: you mentioned at the beginning, you know there's c c
Speaker 1: U S, which that one has been discussed for a
Speaker 1: long time, and I know that part of the industry
Speaker 1: is making progress, but these other things, these I'm not
Speaker 1: even going to try and repeat the technicals off that
Speaker 1: you just said that these other technology advancements. Is this
Speaker 1: all brand new and are there a lot of bets
Speaker 1: being placed and then we'll see hopefully if one or
Speaker 1: to emerge or have these also been around for a
Speaker 1: while and now we're just sort of getting the application
Speaker 1: in the scale that they needed. It's a mix of both,
Speaker 1: but in terms of the way that we have to
Speaker 1: use them to decarbonize a set, it's all relatively new
Speaker 1: and untested. So we really need to kind of step
Speaker 1: up and make sure that we're trying these technologies and
Speaker 1: deploying these technologies commercial scale over the next decade. If
Speaker 1: we really want to reach those targets. But so far
Speaker 1: they've been relatively untested. But we're seeing a lot of
Speaker 1: movement in terms of players trying to kind of bring
Speaker 1: these technologies to market. So the we that needs to
Speaker 1: invest in it that they are kind of a couple
Speaker 1: of different strategies for companies to adapt technology and what
Speaker 1: is doubts our set to a startup and the other
Speaker 1: is to build a house. What's actually happening here, because
Speaker 1: this sounds expensive. One thing that's happening is there's out
Speaker 1: of collaboration going on. So a lot of the players
Speaker 1: are kind of coming up with consortia to work together
Speaker 1: because they're facing the same the same problems, right, So
Speaker 1: it's kind of a matter of gathering resources, sharing i P.
Speaker 1: And trying to work together with your peers who are
Speaker 1: facing very similar, very similar problems. So they're sharing technology, well,
Speaker 1: the sharing technology ideas. I mean, this is essentially in
Speaker 1: the race to net zero that is a space where
Speaker 1: actually we don't have any time to waste in terms
Speaker 1: of keeping proprietary information to oneself as a competitive edge.
Speaker 1: Is that what you're actually seeing in the industry that
Speaker 1: this kind of defies the business competitive logic. I think
Speaker 1: it doesn't really define the competitiveness side of side of business.
Speaker 1: It's more players finally realizing that net zero is non
Speaker 1: negotiable policies around the corner. I mean, if you're not
Speaker 1: already paying carbon prices, you're you're about to. You're probably
Speaker 1: already paying carbon prices in many markets, and you're about
Speaker 1: to start paying them in many more markets. So I
Speaker 1: think it's just these players finally realizing that it's not
Speaker 1: a zero sum game. That you can collaborate, commercialize of
Speaker 1: technology and everyone can be better off for it. It's
Speaker 1: not a question of well I reached net zero, you didn't.
Speaker 1: They all have to. They all have to reach net zero.
Speaker 1: Let's all get there together, Okay. SOE reference GOPE three emissions,
Speaker 1: and I think that there is definitely a theme emerging
Speaker 1: across a number of different shows that we've done and
Speaker 1: switched down when we bring ups three. This is a
Speaker 1: tough thing for every company because what happens to the
Speaker 1: stuff that you have made when you, in theory no
Speaker 1: longer have control over it, at least in the way
Speaker 1: industries are currently set up. So the Scope three emissions,
Speaker 1: what talk to me about the scale of the problem
Speaker 1: for the petrochemical space and what are they facing in
Speaker 1: terms of trying to wrangle this. Yeah, well, when it
Speaker 1: comes to SCOOPE three, specifically downstream Scope three emissions, a
Speaker 1: little of the carbon footprint of these petro chemical products
Speaker 1: can actually end up coming from those downstream remissions because
Speaker 1: there's that carbon captured inside the products. What's interesting here
Speaker 1: is that addressing those downstream Scope three emissions actually fits
Speaker 1: in very very well with the circular economy because circular
Speaker 1: economy is actually your biggest tool when addressing those downstream
Speaker 1: end of life emissions. So for example, instead of incinerating
Speaker 1: plastic waste and it's releasing that fossil based carbon back
Speaker 1: into the atmosphere, you could take that stake recycle its
Speaker 1: that's still a carbon emitting process, but it can be
Speaker 1: certain types of recycling can be less carbon intensive, so
Speaker 1: that can help the carbonize your value chain. But at
Speaker 1: the same time, there are other types of recycling, for
Speaker 1: example chemical recycling that can sometimes actually increase your carbon footprint,
Speaker 1: so they're also moving parts. But the circular economy and
Speaker 1: net zero one area where they intersect are those Scope
Speaker 1: three emissions. And yeah, like I said, that there's just
Speaker 1: alto moving parts. Not only on the technology side and
Speaker 1: the carbon emission side, but i CC mentioned on the
Speaker 1: market side as well, So the carbonizing petrol chemicals, like
Speaker 1: kind of sometimes look at it as kind of playing wacam.
Speaker 1: Whenever you kind of hit one on the head, another
Speaker 1: problem pops up. But if you kind of stay on
Speaker 1: top of it, you can it's actually not that heart
Speaker 1: of a game, constant work in progress, you know. I
Speaker 1: mentioned that these petrol chemical companies that haven't make sculptree
Speaker 1: commitment so far, but I think we have seeing some
Speaker 1: progress on that side because they are collecting data. I
Speaker 1: think that's the first step before you make Scopes three commitment,
Speaker 1: because you need company specific data sets to measure your
Speaker 1: future success, your future improvement. Because currently what they are
Speaker 1: using for the moment is the industry wide default numbers.
Speaker 1: With that you cannot measure how one specific company are
Speaker 1: doing in later years because industry default numbers doesn't change
Speaker 1: really much over the time. So they are collecting data
Speaker 1: like BSF and doubt they are saying that we are
Speaker 1: working with the data side when we get enough data,
Speaker 1: which it could take long time because of this complexity
Speaker 1: of their product catalog. But when they have that, I
Speaker 1: think it's like a more nice transition to their future
Speaker 1: commitment on Scope three. One of the things that I
Speaker 1: think is great is that we've got cc now online
Speaker 1: today from Beijing, so we're trying to cover bit more
Speaker 1: of the world in terms of the perspective. And this
Speaker 1: is a global industry, so you're seeing different petrochemicals producers
Speaker 1: and different parts in the world and invariably definitely being
Speaker 1: consumed all over the world. And there's the parts of
Speaker 1: the petrochemical space from an end consumer standpoint that you
Speaker 1: don't see, but then there's the stuff that we do see,
Speaker 1: and definitely a rise of groups that are putting a
Speaker 1: very clear light on waste streams and not wanting to
Speaker 1: see petrochemical product waste. And so the question here is
Speaker 1: where in the world do you also see a strong
Speaker 1: desire or maybe emerging desire is the right way to
Speaker 1: put it. From policymakers around really addressing this and maybe
Speaker 1: even putting a little additional pressure on the industry to
Speaker 1: look at Scope three. For Dumble in China, there are
Speaker 1: no direct regulations on Scope three saying you, as a
Speaker 1: petro chemical company, you need to deal with your Scope
Speaker 1: three missions. We are not there yet, but we have
Speaker 1: like policy discussions and even policy draft in place talking
Speaker 1: about the waste problem. And that's also in China's like
Speaker 1: road map to carbon neutrality. So I think that is
Speaker 1: definitely gonna help, but it's not like a direct answer
Speaker 1: to the Scope three. Just to add, I think when
Speaker 1: it comes to Scope three spent specifically downstream scope to emissions,
Speaker 1: it's mostly being driven by the circular economy and and
Speaker 1: and the waste push. So it's it's more being framed,
Speaker 1: like you said, as a waste problem than than a
Speaker 1: than an emissions problem, which in the long run indirectly
Speaker 1: will help the carbonize a share of emissions as well.
Speaker 1: Now for a very short break, stay with us. So
Speaker 1: in this space, there are a lot of different avenues
Speaker 1: that companies can address, and so it may be hard
Speaker 1: to really define who's succeeding and who isn't. But there
Speaker 1: are always leaders and laggards, and maybe even if we
Speaker 1: just look at how ambitious the targets are, can you
Speaker 1: name a couple of leaders. I won't make you pick
Speaker 1: laggards because that's just me, and I suppose for today
Speaker 1: we'll focus on leaders C see, I think we have
Speaker 1: the same two names in mind. Do you want to
Speaker 1: say it one? Two? Okay? What makes them leaders? I
Speaker 1: think they're the ones that have actually, in addition to
Speaker 1: the targets that they've set, they've also kind of they've
Speaker 1: made the financial commitments, so they've actually made capex allocation
Speaker 1: commitments to decarbonize their asset bass which is extremely crucial.
Speaker 1: As I said before, we're going to need billions of
Speaker 1: dollars of investment annually to reach those targets. And in
Speaker 1: the case of petro chemicals and those technologies that I
Speaker 1: discussed previously, it's especially important because we don't see those
Speaker 1: technologies necessarily becoming cost competitive with unabated production, so you
Speaker 1: don't have those similar deep learning curves that we've seen
Speaker 1: with renewable power, so like solder and wind or with batteries,
Speaker 1: we don't expect such massive reductions in the cost of
Speaker 1: net zero production when it comes to petrol chemicals, which
Speaker 1: makes it all the more important that you follow up
Speaker 1: with these capex allocation commitments because it's going to cost money,
Speaker 1: so you kind of have to put your money where
Speaker 1: your mouth is. And even for the laggers, I would
Speaker 1: say that I think they will catch up in terms
Speaker 1: of their commitment or their pledge because some of the
Speaker 1: targets we have seen by these petrol chemical producers are made,
Speaker 1: were made like a couple of years ago, and then
Speaker 1: by then they were worrying about their huge capacity expansion plans.
Speaker 1: So they say we we will cut our emission by half.
Speaker 1: But now I think with more and more countries like
Speaker 1: pledging net zeros within like for a facility within that country,
Speaker 1: you eventually have to achieve net zero. So I believe
Speaker 1: they will update their targets very soon. And also we
Speaker 1: are seeing more and more pressures from the investors side,
Speaker 1: so they keep keep getting asked, what are you going
Speaker 1: to do about climate change? How resilient you are even
Speaker 1: the face of climate change? Do you have any plans?
Speaker 1: Do you see it as a risk or opportunities? So
Speaker 1: they need to address these concerns. I think so they
Speaker 1: will come up eventually, and I think it is safe
Speaker 1: to say that those who don't have that zero targets,
Speaker 1: those would be the laggards. Get yourself a target, all right.
Speaker 1: We've talked about too potentially seemingly unrelated things, but we
Speaker 1: know that the world is complex and everything really interacts
Speaker 1: with one another. So the high oil price that we
Speaker 1: discussed at the beginning and decarbonization efforts, let's talk a
Speaker 1: little bit about how they're related. I know we touched
Speaker 1: upon this, but this is a space for me to
Speaker 1: just sign of understand how you're thinking about the future,
Speaker 1: given that we don't know what will happen, but we
Speaker 1: want to see if they're they're going to essentially help
Speaker 1: or hurt. And the reason I really bring this up
Speaker 1: is we're seeing in other parts of the commodities space
Speaker 1: with utilities that coal is having almost a bit of
Speaker 1: a renaissance at the moment because the high gas prices
Speaker 1: are having this knock on. So, yeah, is the high
Speaker 1: oil price helping or hurting decarbonization efforts? So do you
Speaker 1: think they will in the longer term? In your opinion,
Speaker 1: The way that oil prices fit in is it's actually
Speaker 1: a bit more indirectly. So we think that actually when
Speaker 1: it comes to decarbonization, the integrated oil and gas players
Speaker 1: might actually be better positioned for decarbonization when it comes
Speaker 1: to petro chemicals compared to the pure play pet kim's producers,
Speaker 1: and that's because they just have more resources, and they
Speaker 1: just have more money, right, so the amount of topics
Speaker 1: that they can spend that they've already spend on these
Speaker 1: low carbon technologies can be much much higher than the
Speaker 1: petro chemicals companies have been targeting to spend. And that
Speaker 1: just goes back to kind of even when the oil
Speaker 1: prices are high or even a bit lower, just the
Speaker 1: amount of resources those integrated players have are pretty massive.
Speaker 1: So I think it can actually mean that they're better
Speaker 1: position for decarbonization. Whether they kind of act on that
Speaker 1: and decarbonize their downstream activities, that's that's another question. I
Speaker 1: think the higher orl price could also be a push
Speaker 1: because as we see now days like in Asia, with
Speaker 1: all the high oil prices, this Asian based can producers,
Speaker 1: they are losing money for like six months straight, so
Speaker 1: that has to push them to think what additional value
Speaker 1: cannot create then compete in this like very raw capacity
Speaker 1: competition with all this the new ones. Where is my advantages?
Speaker 1: I think like the low carbon aspect could be a
Speaker 1: like a good cutting point because with that you could
Speaker 1: have have oh like the green premium into that and
Speaker 1: you do not need to compete with these low cost producers.
Speaker 1: You could have your own advantage, but that's also depending
Speaker 1: on the consumers willingness to pay for the screen pyramid.
Speaker 1: I think that's another topic of another podcast. And I
Speaker 1: suppose that the investors desire, whether or not to put
Speaker 1: pressure on company is to create these products in a
Speaker 1: certain way or at least invest in the R and
Speaker 1: D end of things in order to remain appealing. On
Speaker 1: the shareholders side, one thing is not all your shareholders
Speaker 1: are activists investors. You also have to just make sure
Speaker 1: that you're navigating the space. But there are competing interests.
Speaker 1: I think that's also important to remembers. Do we have
Speaker 1: a good feel on the consensus view on where oil
Speaker 1: price is going to go? I think the whole market
Speaker 1: is waiting for more clarity on where the sanctions might
Speaker 1: go because currently it's just a wait and see attitude.
Speaker 1: If there is full sanctions or direct sanctions on the
Speaker 1: energy sector. I know the the government are saying that
Speaker 1: they are not targeting the the energy sector, but it's
Speaker 1: I think it's it's hard to say. For the moment.
Speaker 1: Closing question, what is the coolest technology in your opinion
Speaker 1: as an industry geek, I'm going to say so to
Speaker 1: the chemicals, even though it's very out there and it's
Speaker 1: probably never gonna be cost competitive and it will remain
Speaker 1: a niche technology. Just the potential to make these petrochemical
Speaker 1: products into carbon sinks is very exciting, but I'm very
Speaker 1: skeptical but interested. CC. Is there a technology that you
Speaker 1: think is extra interesting? I would think from a business perspective,
Speaker 1: I would choose like pyrolysis, like that theero chemical recycling,
Speaker 1: where you get like the same kind of feedstock but
Speaker 1: from a risk leve link that can be fit into
Speaker 1: your existing facilities. I think that could mobilize more involvement
Speaker 1: from more companies so they do not need to invest
Speaker 1: additionally or massive amount on on on this new technology.
Speaker 1: If we could have and that they were recycling and
Speaker 1: get this pyrolysis oil, then that's much easier for for
Speaker 1: those smaller players to to decarbonize. Excellent. Thank you for
Speaker 1: joining today. Thank you, Thank you. If you're interested in
Speaker 1: the things we discuss on this show and think, hey,
Speaker 1: I'd like to be involved in researching some of those
Speaker 1: types of topics are open. Roles can be found on
Speaker 1: Bloomberg dot com on the careers page. Just search for BNF.
Speaker 1: Today's episode of Switched On was edited by Rex Warner
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