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Speaker 1: Hi, this is Dana Perkins and you're listening to Switched

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Speaker 1: on the BANNIF podcast. At B and EF we talk

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Speaker 1: a lot about the energy transition, the pace of change,

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Speaker 1: the drivers, what the future of an increasingly complex energy

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Speaker 1: system could look like. And today we have the opportunity

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Speaker 1: to hear firsthand from Martin Witsellar, the CEO of SEPSA,

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Speaker 1: regarding what they're changing, what are their targets for decarbonizing,

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Speaker 1: what are some of the things that they might be

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Speaker 1: struggling with, and what could the future of their company

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Speaker 1: look like now. For background, SEPSA first started over ninety

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Speaker 1: years ago and they are the first private oil company

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Speaker 1: in Spain. Today they're across five continents and historically their

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Speaker 1: business activities have been focused on oil, gas and chemicals,

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Speaker 1: so this is quite a pivot. With their announcement of

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Speaker 1: their Positive Motion Plan, SEPSA is now investing sixty percent

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Speaker 1: of their eight billion investment budget into sustainable business activities.

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Speaker 1: By the end of the current decade, they want to

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Speaker 1: see a fifty five percent emissions reduction when compared to

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Speaker 1: twenty nineteen law. So how are they going to pull

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Speaker 1: it off and what is their strategy? Well, BN EF's

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Speaker 1: deputy CEO, Albert Chung, spoke with Martin about just that.

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Speaker 1: They discussed topics including international competition between nations within the

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Speaker 1: clean energy space, seps's to Gigawat and a Lucian hydrogen

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Speaker 1: Valley project, and the new Green Corridor between Spain and

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Speaker 1: the Netherlands. And they also talk about transportation and mobility

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Speaker 1: customers and how SEPs is adapting to meet their needs,

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Speaker 1: and of course SEPs as plans for their upstream business.

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Speaker 1: If you like this podcast, make sure to subscribe to

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Speaker 1: receive updates on future episodes on your device and possibly

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Speaker 1: give us a review on Apple or Spotify. If you

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Speaker 1: want to be alerted on Twitter, subscribe to the handle

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Speaker 1: at podcasts and you'll hear about new episodes that come

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Speaker 1: out of Switched On and also other Bloomberg podcasts. Please

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Speaker 1: note that bn EF does not provide investment or strategy advice,

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Speaker 1: and our full disclaimer can be found at the very

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Speaker 1: end of the show. And now let's get to the

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Speaker 1: conversation between Albert and Martin.

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Speaker 2: Martin, it's great to have you on the show today.

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Speaker 2: Thank you so much for joining us.

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Speaker 3: Albert, good morning from Madrid. Delightful to be with you

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Speaker 3: and discuss some fundamental topics today.

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Speaker 2: Thanks Martin. I do want to get your thoughts on

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Speaker 2: this current energy situation in Europe and the opportunities and

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Speaker 2: challenges in the energy transition. But before we dive into

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Speaker 2: all of that, I was hoping you could take a

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Speaker 2: minute just to tell us a bit about your own

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Speaker 2: journey and your career and how you came to be

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Speaker 2: in the position you're in today. Would you mind telling

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Speaker 2: us a bit about that.

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Speaker 3: So I joined the energy industry almost thirty years ago,

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Speaker 3: which is a somewhat scary data point. When I joined,

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Speaker 3: I thought the people that joined thirty years ago should

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Speaker 3: go and do something else. But here I am and

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Speaker 3: still full of ambition and keen to make an impact.

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Speaker 3: So joined in nineteen ninety five at Shell, the Anglo

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Speaker 3: Dutch nowadays Anglo Major and pursue the career that took

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Speaker 3: me through almost all the businesses. So I started in

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Speaker 3: the downstream trading business, then in downstream trategy and marketing

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Speaker 3: and finance, and moved into upstream and quickly from the

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Speaker 3: upstream business, cut engaged on the gas business and that's

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Speaker 3: where I probably spent the majority of my time in Shell.

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Speaker 3: To basically grow consolidate the gas business and particularly the

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Speaker 3: lerg business, which at the time was still i would

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Speaker 3: say in the beginning a bit of a niche business. Nowadays,

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Speaker 3: of course, is a global business in its own right,

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Speaker 3: and certainly in Shehall it's one of the biggest businesses

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Speaker 3: that the company has and I was privileged to lead

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Speaker 3: that business for nine years, three years as an EVP.

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Speaker 3: And then you may recall both BG Group former British Gas,

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Speaker 3: who were also a significant energy company. We combined the

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Speaker 3: businesses and I moved on to the executive committee of Shell,

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Speaker 3: where I stayed for six years, running that gas business

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Speaker 3: but also picking up the newly formed new energies business.

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Speaker 3: In twenty sixteen, Shall switched on a new energies business

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Speaker 3: which had before in the two thousands but basically closed

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Speaker 3: down in two thousand and eight two thousand and nine,

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Speaker 3: started up again in twenty sixteen, and so over the

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Speaker 3: last six years, based in then Atherlans, I rent both

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Speaker 3: the gas and energy business and the new energies business,

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Speaker 3: which took Shell into offshore wind, into solar, but also

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Speaker 3: into biofuels, hydrogen batteries, power training, power sales et cetera

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Speaker 3: to customers, so setting up an integrated new energies business there,

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Speaker 3: and then in the course of twenty twenty one, the

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Speaker 3: opportunity to lead SEBSAT came along, and eventually I took it,

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Speaker 3: not just because the amazing city that marid is, with

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Speaker 3: its climate and it's the social life, it's position in

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Speaker 3: the center of Spain, a bit more over because I

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Speaker 3: saw an opportunity to lead a fundamental and very fast

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Speaker 3: transformation of a company that has as a starting point

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Speaker 3: and we can talk about it later, a quite traditional

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Speaker 3: fossil fuel based integrated oil gas chemicals business, to lead

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Speaker 3: a transition that would actually before the end of the decade,

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Speaker 3: turned that into a leader in in clean energies, clean

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Speaker 3: green molecules, and clean mobility or sustainable mobility. And that

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Speaker 3: opportunity to me was irresistible. So I moved by the

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Speaker 3: end of twenty twenty one, and I am now fourteen

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Speaker 3: months into that adventure and very pleased with the progress

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Speaker 3: and still at the same time quite in all of

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Speaker 3: what still needs to be done to get to the endpoint.

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Speaker 2: Thanks Martin, Thank you for sharing that. It's really interesting

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Speaker 2: to hear how your own story has in some ways

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Speaker 2: mirrored the transition itself in terms of the focus of

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Speaker 2: what you've been working on. Now, as you say you've

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Speaker 2: been at the Helm of Stepster for a little bit

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Speaker 2: over a year, now, could you first maybe tell us

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Speaker 2: a bit about the company first of all for those

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Speaker 2: of our listeners who are less familiar, and then I'd

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Speaker 2: also love to hear what you've learned since joining the company,

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Speaker 2: anything that surprised you perhaps over that year, and a

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Speaker 2: bit that you've been there now.

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Speaker 3: Yeah. So, SEMSA is a company headquarter in Spain, but

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Speaker 3: with a relatively global portfolio in some businesses. So it

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Speaker 3: has an extreme business in the Middle East and in

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Speaker 3: Latin America. It has a chemicals business that really is global.

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Speaker 3: It is in all time zones in nine different countries.

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Speaker 3: We produce chemicals and we sell them in many more countries.

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Speaker 3: And then the size a downstream business that's quite focused

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Speaker 3: on the Iberian Peninsula, so in Spain, Portugal, but also

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Speaker 3: has a presence in Mexico and Morocco. In the downstream,

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Speaker 3: the company owns the largest refinery in Spain and another

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Speaker 3: big one both in the south of Spain and Ondalucia,

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Speaker 3: and that's relevant when we start to talk about the transition,

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Speaker 3: and we are eighteen hundred service stations and are significant

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Speaker 3: players in aviation, in bunkering. In all that, let's say,

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Speaker 3: the classic B two B and B two C businesses

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Speaker 3: in the oil industry were less less of a player

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Speaker 3: in meatural gas actually, although we do import the products.

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Speaker 3: So it's company with between twenty eleven thousand employees last

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Speaker 3: year three billion dollars of EBITA to give you a

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Speaker 3: sense of the dimensions. And one of the things I've

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Speaker 3: learned is you, of course when I joined, or before

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Speaker 3: I joined, I talked as significantly to be shareholders about

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Speaker 3: what they were hoping to achieve with how they saw

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Speaker 3: the future, and they very much saw the future or

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Speaker 3: were very interested in the future that will be a

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Speaker 3: radical transformation into the transition data. Partly because they think

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Speaker 3: that's the right thing to do, that the world needs

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Speaker 3: an example of that, or multiple examples of that. But

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Speaker 3: I would say also partly because attracted by the situation

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Speaker 3: in the equity markets where companies with a predominantly fossil

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Speaker 3: portfolio at the moment, certainly in Europe, attracked ebe down

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Speaker 3: multiples of three and a half to four in evaluation,

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Speaker 3: whereas companies that are predominantly sustainable and green attract double

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Speaker 3: digit eb down multiples in evaluations. So if you apply

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Speaker 3: that to let's say a three billion door EBITA, it's

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Speaker 3: the difference between a ten billion dollar valuation and thirty

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Speaker 3: billion dollar valuation. And since re private equity owned, there's

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Speaker 3: an incentive to see can you get from A to

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Speaker 3: B and can you do it this decade? So with

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Speaker 3: that inside and with the chareholder Wiship, I certainly have

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Speaker 3: studied the company ahead of joining and these I thought

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Speaker 3: it was possible. But I think the lesson that I've

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Speaker 3: learned is that strategy is really an art of making choices,

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Speaker 3: and too many companies and I think that was also

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Speaker 3: probably the case in thepside before, end up doing a

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Speaker 3: bit more of everything. In our sector, companies with such

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Speaker 3: a broad portfolio of chemicals, upstream gas, downstream renewables end

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Speaker 3: up their strategy ends up being, well, let's grow everything

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Speaker 3: a little bit. And what we've come up with is

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Speaker 3: a strategy that really makes choices, that decides to ribble down,

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Speaker 3: triple down on sustainability businesses. We've announced that we will

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Speaker 3: invest more than sixty percent over our eight billion investment

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Speaker 3: budget into sustainable businesses the rest of this decade, creating

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Speaker 3: a company that's more than fifty percent sustainable income by

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Speaker 3: the end of the decade, and therefore, as a result,

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Speaker 3: shrink the classic business of fossil based businesses by essentially

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Speaker 3: running them for maximum value rather than investing in them.

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Speaker 3: And I think that having such a clear choice on

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Speaker 3: the strategy has been important internally to make to align

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Speaker 3: everybody and to give direction to the company. But it's

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Speaker 3: also been hugely helpful excellently because it really creates a

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Speaker 3: story about where we're going, and a story that is

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Speaker 3: easier to understand and that can be explained by all

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Speaker 3: the other thousand people in the company, but also can

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Speaker 3: be easily understood by people who we deal with in government,

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Speaker 3: in regulatory agencies, in the press, and in the general public.

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Speaker 3: And having a story that is focused and that is exciting.

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Speaker 3: I think we're reaping the benefits of that every day,

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Speaker 3: even if we're only at the start of executing story.

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Speaker 2: Yeah, And I think that's a really powerful insight on

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Speaker 2: strategy being the art of making choices. I really like that.

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Speaker 2: And I've always thought that if you say yes to everything,

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Speaker 2: then it's not a real strategy. So yeah, half of

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Speaker 2: strategy is knowing what to say no to. So I

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Speaker 2: think that's a really powerful message. Now, I know you've

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Speaker 2: already touched on this. Actually, SEPSO has announced a new

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Speaker 2: strategy in the last year called Positive Motion, which is

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Speaker 2: all about transforming to net zero. You've already started telling

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Speaker 2: me a bit about that, but cauld ask you maybe

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Speaker 2: just to map out some of the main pillars, the

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Speaker 2: main components of that. What are the main pieces that

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Speaker 2: make up that overall strategy over the next eight to

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Speaker 2: ten years.

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Speaker 3: At its core, it starts with understanding who our customers

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Speaker 3: are and what they need from us, what they most

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Speaker 3: need from us this decade. Also on the B to

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Speaker 3: B and the B two C side, we want to

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Speaker 3: retain those customers and in a way attract many new

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Speaker 3: customers and offer them decarbonization solutions. The carbon footprint of

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Speaker 3: a company like Stebsite is significant, but eighty five percent

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Speaker 3: of that carbon footprint if you go scope one, Scope two,

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Speaker 3: Scope three, so let's say life cycle carbon impact of

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Speaker 3: our product, not just our own emissions but also our

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Speaker 3: customer emissions, eighty five percent of the emissions take place

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Speaker 3: when the customer use our products when they drive the car,

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Speaker 3: and they use the gasoline over the plane flys and

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Speaker 3: they use the curacy. So for us to have a

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Speaker 3: meaningful and impactful impact on climate change and on the

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Speaker 3: energy to tradition, decarbonizing our own facilities doesn't make much of

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Speaker 3: a difference because it's only fifteen percent of our carbon footprint.

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Speaker 3: We need to do that, of course, and we're doing it.

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Speaker 3: But much more importantly is that we help our customers

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Speaker 3: decarbonize their energy use, which will then decarbonize the life

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Speaker 3: cycleed carbon footprint of our business. But starts with understanding

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Speaker 3: what do our customers need to decarbonize, and it's actually

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Speaker 3: a relatively simple story. We think that there are mobility

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Speaker 3: customers which are at the B two C side. That

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Speaker 3: starts with let's say the cars that fill up at

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Speaker 3: one of our eighteen hundred stations will need green electrons,

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Speaker 3: will need electric vehicle charging solutions because that's where light

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Speaker 3: vehicles are going by and large, So on that segment,

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Speaker 3: we are raining down all Liberia super fast chargers so

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Speaker 3: people can can charge in fifteen twenty minutes to eighteen

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Speaker 3: ninety percent of their battery and go on their live

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Speaker 3: journey again with their ev charge staff. Of course, we

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Speaker 3: continue to offer diesel and gasoline as we go, but

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Speaker 3: becoming the leader in super fast charging in Iberia is

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Speaker 3: our main B two C strategy. Alongside that strategy comes

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Speaker 3: a convenience strategy, because, of course those customers will spend

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Speaker 3: a bit more time in our stations, let's say twenty

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Speaker 3: minutes on average, and therefore we want to give them

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Speaker 3: options to make the most of those twenty minutes. Whether

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Speaker 3: that's drinking coffee or doing some e commerce, or picking

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Speaker 3: up a meal, or picking up groceries or having a

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Speaker 3: meal are many, There are many options. But we will

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Speaker 3: treat those stations not so much anymore as places where

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Speaker 3: you have to go because you want to fill up

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Speaker 3: your garmend casoline, but where you want to go because

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Speaker 3: there are convenience locations that are offer many options whow

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Speaker 3: you charge your vehicles. So on the B two C side,

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Speaker 3: it's super fast charging plus convenience strategy. On the B

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Speaker 3: to B side, what our customers need most from us

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Speaker 3: is green molecules. And I mean with that is many

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Speaker 3: sectors in the B to B business that we serve

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Speaker 3: are very difficult to be electrifying. The ones that can

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Speaker 3: electrify will do so because that's the easiest way to

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Speaker 3: decarbonize your energy usage. But there are many sectors such

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Speaker 3: as aviation, such as maritime trans or such as heavy industry,

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Speaker 3: but also such a heavy transport big tracks driving long

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Speaker 3: distance for whom it's or the fertilizer sector, the chemical sector,

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Speaker 3: for whom it's very difficult to electrify. But they still

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Speaker 3: need a decarbonization solution and for that they need green molecules.

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Speaker 3: And we've elected so again a choice. We could try

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Speaker 3: and serve the industry that electrifies, but we actually believe

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Speaker 3: that we can be more distinct by developing green molecules.

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Speaker 3: We've been in a molecule business for one hundred years.

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Speaker 3: They've been hydrocarbon molecules. Now we will develop green molecules.

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Speaker 3: And essentially there's two main families there. There are biofuels

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Speaker 3: and gases, and there is the green hydrogen family. On biofuels,

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Speaker 3: we want to become one of the main suppliers of

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Speaker 3: sustainable aviation fuel in Europe and we will start making

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Speaker 3: some substantial investments this year. We already produce sustainable aviation

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Speaker 3: fuel and on green hydrogen. We will also become one

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Speaker 3: of the major suppliers in Europe of green hydrogen and

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Speaker 3: its derivatives green ammonia and pretend green methodol, and in

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Speaker 3: that way we can decarbonize the carbon footprint of our

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Speaker 3: industrial of our let's say B two B customers who

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Speaker 3: need green molecules and our BDC customers that need green electrials.

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Speaker 3: So that is broadly, let's say the growth strategy underpinned

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Speaker 3: by a significant renewable energy investment, which we will do

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Speaker 3: to sell green electrons to customers or so to end customers.

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Speaker 3: We will do it for own use. We will do

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Speaker 3: about seven gigabatts of renewable solar wind electricity then will

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Speaker 3: go to feed the super fast charging for the B

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Speaker 3: two C customers and then will be used to make

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Speaker 3: to produce the green hydrogen and to produce the biofuels

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Speaker 3: and biogases. And so it's an own use strategy. We

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Speaker 3: will not significantly compete in the electricity market itself, not

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Speaker 3: because we because it's a bad business, but again because

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Speaker 3: strategy is about making choices. So that's that's the growth

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Speaker 3: part of the agenda. And then we will de emphasize

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Speaker 3: our extreme business. As you may have seen, we've recently

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Speaker 3: announced the sale of our oil production business Adown. That's

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Speaker 3: about half of our extreme and in the rest of

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Speaker 3: our exstream positions, we are really not growing apart from

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Speaker 3: making the investments in the fields that we already have

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Speaker 3: that makes sense. We are running that business for maximum value,

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Speaker 3: and you will see the relative weight of our extreme

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Speaker 3: business decline in our portfolio as we grow the green

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Speaker 3: side and as we run that business form maximum value

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Speaker 3: going forward. Our chemicals business does have a green agenda,

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Speaker 3: is able to decarbonize and become green at kind of

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Speaker 3: the pace that our energy businesses, so we've decided to

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Speaker 3: keep that alongside our business for now and go on

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Speaker 3: also go on a pretty aggressive green strategy. Our main

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Speaker 3: business is to make La b which goes into the

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Speaker 3: surfactanins business, which eventually people use to wash their clothes

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Speaker 3: or wash their hands, et cetera. And we believe that

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Speaker 3: is a sector that will decarbonize early, where our green

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Speaker 3: propositions will attract the preview.

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Speaker 2: So maybe just to drill into some of the opportunity

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Speaker 2: areas there that you see across immobility, across hydrogen and

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Speaker 2: bio fuels and sustainably aviation fuels. How are you thinking

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Speaker 2: about the relative size of those opportunities between now and

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Speaker 2: twenty thirty? Are they different sizes and different values to you?

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Speaker 2: Do they carry different risk profiles? How are you thinking

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Speaker 2: about the balance of those different opportunities there?

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Speaker 3: They are all different and indeed have kind of different

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Speaker 3: sizes and risk profiles. If you look at electric vehicle charging,

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Speaker 3: it is a business that where there's no question that

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Speaker 3: will be there. The European Union will drive adoption of

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Speaker 3: EV very very hard in the coming decade, and therefore

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Speaker 3: the fleet will change to EV. There's no question. The

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Speaker 3: question is a bit how fast you see very big

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Speaker 3: differences in Europe Norway, I think eighty five percent of

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Speaker 3: the cars are now EV's that are sold. Netherlands and

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Speaker 3: Germany it's twenty five growing to thirty, and in Spain

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Speaker 3: it's four. And so the big question how fast will

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Speaker 3: that four grow to twenty to thirty, to fifty and

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Speaker 3: eighty And it's a bit a noble but it certainly

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Speaker 3: depends also on the amount of infrastructure available. So we

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Speaker 3: want to be part of the solution, will investigate it,

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Speaker 3: We will invest ahead of the growth of that EV park,

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Speaker 3: which hopefully will in itself trigger growth of the EV park,

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Speaker 3: because we believe it's a bit of a business of

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Speaker 3: a land grap where it's better to be early than

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Speaker 3: to than to be laid, and by creating an installed base,

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Speaker 3: we can grad a much higher market share in the

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Speaker 3: EV charging business, let's say up to twenty five percent

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Speaker 3: that we have in the fossil the business, where we

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Speaker 3: are somewhere somewhere apt to after thirteen percent. It's an

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Speaker 3: opportunity for step change in our market share by going

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Speaker 3: early on ev charging, but eventually the opportunity is limited

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Speaker 3: by the size of the car park in Iberia and

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Speaker 3: the size of our network, so you cannot grow that forever.

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Speaker 3: On biofuels, particularly sustainable aviation fuel, the risk profile is

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Speaker 3: an interesting one. It's not so much to demount because

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Speaker 3: the aviation sector really has only one credible near to

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Speaker 3: medium term to decarbonized, which is stainable aviation fuels, and

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Speaker 3: again in Europe will be forced by the European Union

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Speaker 3: to adopt. Many companies want to adopt, but even those

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Speaker 3: who don't want to will be forced by regulation to

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Speaker 3: start buying the stainable aviation fuel. So in a way,

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Speaker 3: the demand in that sector is kind of de risked.

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Speaker 3: It will be there and it will grow. The risk

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Speaker 3: profile in the biofuel's business much from the supply side.

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Speaker 3: Can you find enough second generation feedstock that is genuinely

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Speaker 3: sustainable and not food based but waste based. Can you

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Speaker 3: find enough speedstock to grow your business? And so we

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Speaker 3: are very very strongly focused at being allocating substantial resource

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Speaker 3: to find a to originate in feedstock supply into the

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Speaker 3: South of Spain so we can be a leader in

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Speaker 3: producing biofields of stainable aviation fuel. The main risks on

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Speaker 3: the supply the feedstock supply side, on the green hydro

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Speaker 3: side is the other way around. Feedstock is not a problem.

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Speaker 3: You just need water and reheuble electricity and where we

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Speaker 3: are in the South of Spain is the best place

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Speaker 3: in Europe for reneble electricity. We have the best combination

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Speaker 3: of sun wind and space. And what I mean by

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Speaker 3: space is the opportunity to build world class solar wind

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Speaker 3: parks because there's quite a those space in the Midleland

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Speaker 3: and South of Spain that that's usable. It's the population

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Speaker 3: density is quite low. All of a sudden, the winter

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Speaker 3: you get very two renewable electricity and the other component

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Speaker 3: you need is water and you don't need so much

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Speaker 3: of it. And actually by reducing our own use in

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Speaker 3: the refinery is we can free up enough water to

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Speaker 3: grow a very very large hygien business. So there is

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Speaker 3: no constraint on the feedstock side on hygien. The constraint

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Speaker 3: there at the market is to actually develop customers who

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Speaker 3: want to buy hydrogen and that so that's a very

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Speaker 3: different risk profile. But the good thing is these three

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Speaker 3: businesses all have their own different risk profiles, and so

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Speaker 3: by growing all three of them, you can actually you

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Speaker 3: get diversification. You don't just depend on one single one

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Speaker 3: of them working out. One of them might work out

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Speaker 3: better than the others. But by growing all three into

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Speaker 3: a leadership position, we're pretty comfortable with the decarbonization drive

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Speaker 3: that we have in Europe, with the advantage position that

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Speaker 3: we have in the South of Spain in terms of

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Speaker 3: clean power being the cheapest in Europe, we will have

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Speaker 3: a strong clean energy portfolio in the course of this decade.

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Speaker 2: Maybe just to spend another minute on hydrogen, I noticed

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Speaker 2: your very exciting announcement that you've made around this two

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Speaker 2: gigawats project. I believe it's called the Andalusian Green Hydrogen

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Speaker 2: Valley if I recall correctly. We have a coalition of

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Speaker 2: partners including Furtive Barrier, the fertilizer company, which clearly will

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Speaker 2: have a use for hydrogen. So my question first of

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Speaker 2: all is what did it take to get that project

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Speaker 2: up and running. Clearly having that anchor customer is critical.

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Speaker 2: And then where do you then see that hydrogen flowing?

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Speaker 2: More broadly, I presume there'll be other applications for that

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Speaker 2: hydrogen coming out of this two gigawort project, So where

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Speaker 2: do you see it going into? Which industries and which geographies.

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Speaker 3: It's a very exciting projects. It's ten times the size

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Speaker 3: of the largest hydro project in Europe being constructed at

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Speaker 3: the moment, which is in Rotterdam built BCHEL Mega. What

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Speaker 3: is a is a major chef change in the industry,

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Speaker 3: and we are we are fortunate we have a number

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Speaker 3: of things in place. As I said, very cheap renewable

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Speaker 3: power and electricity is about eighty percent of the court

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Speaker 3: of green hydrogen. So when you have the cheapest renewable

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Speaker 3: power and you're likely to have the cheapest green hydroen

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Speaker 3: so that's one key element. But the second key element, indeed,

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Speaker 3: is that we have local demands that we can use

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Speaker 3: as a way to get going. We have the alliance

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Speaker 3: with thirty BA. We ourselves, with our two refineries, are

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Speaker 3: significant hydrogen users and we will consume our own green hydroen.

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Speaker 3: And then we have a number of other customers more

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Speaker 3: in the aluminium and steel side around our energy parks

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Speaker 3: in the south of Spain that our potential and I

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Speaker 3: would say likely customers that we are having discussion. So clearly,

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Speaker 3: if you're going to build a hydroen valley, the first

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Speaker 3: step is to serve local demand, and we have quite

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Speaker 3: a bit of local demand. But then the second step

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Speaker 3: is to start to serve demand in other areas. And

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Speaker 3: for that you need to transport the product. And that's

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Speaker 3: totally trivial when it comes to hydroen because it typically

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Speaker 3: can't use existing gas by bine systems and although you

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Speaker 3: can blend them with a network that it doesn't derive

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Speaker 3: as hydro with the customer. So there is a plan

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Speaker 3: in Europe, a very detail plan in Europe that the

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Speaker 3: European Union is committed to to build a hydrid pipeline

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Speaker 3: system in Europe. That will eventually solve that issue, but

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Speaker 3: that's going to take time. The EU says by twenty

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Speaker 3: thirty that will be very fast, could be in the

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Speaker 3: cause of the thirty so we can't wait for that

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Speaker 3: to go and so for us to second. After having

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Speaker 3: served local demand, we see the best opportunity in turning

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Speaker 3: green hydroen into green ammonia, which is easily shippable, and

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00:22:35,640 --> 00:22:38,119
Speaker 3: then we have a number of destinations for that, so

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Speaker 3: we will produce green ammonia. We've done a deal with

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Speaker 3: the port of Rotterdam where we create a green ammoniac

434
00:22:44,520 --> 00:22:47,240
Speaker 3: corridor between a Caceras which is the second part in

435
00:22:47,320 --> 00:22:49,439
Speaker 3: Europe and Rotterdam, which is the first port in Europe.

436
00:22:49,600 --> 00:22:53,240
Speaker 3: There's a big ammonia market in Rotterdam for fertilizer for

437
00:22:53,359 --> 00:22:56,960
Speaker 3: other uses that we can supply into from all caesiras

438
00:22:57,520 --> 00:23:00,680
Speaker 3: and we are sponsoring the construction of the infrastructure we

439
00:23:00,760 --> 00:23:03,680
Speaker 3: need in Rotterdam to do so. But we are also

440
00:23:03,800 --> 00:23:09,199
Speaker 3: developing a business of selling ammonia into ships. The maritime

441
00:23:09,280 --> 00:23:13,119
Speaker 3: sector will need to de carbonize and the two available

442
00:23:13,160 --> 00:23:17,800
Speaker 3: pathways are methanol and green ammonia, both made using green hydrogen.

443
00:23:18,119 --> 00:23:20,800
Speaker 3: So over time, we also expect to be selling into

444
00:23:20,840 --> 00:23:23,480
Speaker 3: ships or to sell into other markets. Japan is a

445
00:23:23,560 --> 00:23:26,240
Speaker 3: market that is very keen to bigreen ammonia, and so

446
00:23:26,359 --> 00:23:28,399
Speaker 3: that will be the second level of customer that we

447
00:23:28,440 --> 00:23:32,080
Speaker 3: will serve, the shipping industry and the ammonia market globally.

448
00:23:32,240 --> 00:23:35,560
Speaker 3: And then eventually, as we think of scaling that well

449
00:23:35,640 --> 00:23:38,119
Speaker 3: beyond the two gigabots, we would start to count on

450
00:23:38,200 --> 00:23:41,040
Speaker 3: the pipeline system to take the hydrogen to the north

451
00:23:41,040 --> 00:23:43,760
Speaker 3: of Europe. So there are a number of layers. The

452
00:23:43,880 --> 00:23:47,159
Speaker 3: last layer, I would say is developing a trucking market.

453
00:23:47,359 --> 00:23:50,240
Speaker 3: We do see that for a long distance heavy trucking,

454
00:23:50,480 --> 00:23:54,720
Speaker 3: hydroen is the logical alternative, and we have a plan

455
00:23:54,840 --> 00:23:58,760
Speaker 3: to start constructing hygen stations in Spain and then link

456
00:23:58,880 --> 00:24:01,960
Speaker 3: into hydrogen distribution facilities in the rest of Europe to

457
00:24:02,080 --> 00:24:05,240
Speaker 3: start sending HydroD to drugs, which is a also shepherd

458
00:24:05,240 --> 00:24:08,520
Speaker 3: as otherwise very very difficult to decarbodize. So we see

459
00:24:09,000 --> 00:24:11,520
Speaker 3: a large market opportunity in front of us, but we

460
00:24:11,640 --> 00:24:13,000
Speaker 3: need to develop it step by step.

461
00:24:13,280 --> 00:24:16,000
Speaker 2: It's a really interesting concept to start with the local demand,

462
00:24:16,080 --> 00:24:19,800
Speaker 2: but then ultimately to think about transforming Spain's inexpensive green

463
00:24:19,840 --> 00:24:22,639
Speaker 2: electrons into molecules that can then supply the rest of Europe.

464
00:24:22,640 --> 00:24:25,760
Speaker 2: I think that's a really exciting, really exciting concept. Maybe

465
00:24:25,840 --> 00:24:27,680
Speaker 2: just to zoom out, Martin, just think about the oil

466
00:24:27,720 --> 00:24:30,360
Speaker 2: and gas sector and the opportunities in the energy transition

467
00:24:30,440 --> 00:24:33,320
Speaker 2: more broadly. I remember when you were in your previous role.

468
00:24:33,640 --> 00:24:35,360
Speaker 2: You were at Shell at the time, and you join

469
00:24:35,440 --> 00:24:38,040
Speaker 2: me on stage at our BNF New York summit. It

470
00:24:38,080 --> 00:24:40,000
Speaker 2: must have been four or five years ago. I remember

471
00:24:40,000 --> 00:24:42,520
Speaker 2: you explaining with quite some conviction that you felt that

472
00:24:42,640 --> 00:24:45,639
Speaker 2: oil and gas companies can and must play a leading

473
00:24:45,760 --> 00:24:49,040
Speaker 2: role in the energy transition. Now, I assume and I

474
00:24:49,119 --> 00:24:51,399
Speaker 2: can tell that that's still your conviction. But now that

475
00:24:51,440 --> 00:24:53,720
Speaker 2: you're at SEPSO, which is still quite a large company,

476
00:24:53,800 --> 00:24:56,720
Speaker 2: but somewhat smaller and different in structure, different in focus,

477
00:24:57,040 --> 00:24:59,159
Speaker 2: do you feel that SEPSA has a different set of

478
00:24:59,280 --> 00:25:01,920
Speaker 2: advantages or or different challenges than other players in the

479
00:25:02,000 --> 00:25:04,760
Speaker 2: industry and how do you see that playing into your strategy.

480
00:25:04,960 --> 00:25:07,879
Speaker 3: Yeah, we talk about the size of steps. We always

481
00:25:07,880 --> 00:25:12,080
Speaker 3: say it's it's big enough to matter, but small enough

482
00:25:12,160 --> 00:25:15,920
Speaker 3: to change fast. And I think that is that is

483
00:25:16,040 --> 00:25:18,879
Speaker 3: very true, But that's not the only distinct position that

484
00:25:18,960 --> 00:25:22,720
Speaker 3: we have. I do absolutely believe that our position in

485
00:25:22,760 --> 00:25:24,720
Speaker 3: the south of Spain and we are the only company

486
00:25:24,880 --> 00:25:28,960
Speaker 3: with energy parks and with logistics assets, et cetera. The

487
00:25:29,040 --> 00:25:31,640
Speaker 3: only energy player with a position in the south of Space,

488
00:25:31,680 --> 00:25:34,720
Speaker 3: so it's not that easy to copy. Is an advantage

489
00:25:34,760 --> 00:25:37,600
Speaker 3: that we have and that helps helps us be pioneers

490
00:25:37,640 --> 00:25:40,920
Speaker 3: in this area or the early movers. But I think

491
00:25:40,960 --> 00:25:45,080
Speaker 3: there's another issue at play Albert, which is ownership structure.

492
00:25:45,520 --> 00:25:49,400
Speaker 3: I have two private equity owners, Mubadla and Carla, who

493
00:25:49,560 --> 00:25:52,800
Speaker 3: are convinced that this is the right strategy for steps

494
00:25:53,000 --> 00:25:56,200
Speaker 3: to follow and put their money and governance behind it

495
00:25:56,560 --> 00:26:00,320
Speaker 3: and allow us to execute very fast and quite medical

496
00:26:00,359 --> 00:26:02,960
Speaker 3: transformation of the portfolio and the business. I think what

497
00:26:03,080 --> 00:26:06,280
Speaker 3: we've seen in public equity markets is that they're very

498
00:26:06,400 --> 00:26:10,200
Speaker 3: hard to read, and if anything, they've been going the

499
00:26:10,280 --> 00:26:13,560
Speaker 3: other way. I think the most recent proof point would

500
00:26:13,560 --> 00:26:16,600
Speaker 3: be when VP announced that they were going to reverse

501
00:26:16,720 --> 00:26:19,960
Speaker 3: to some extent their commitment to reduce their oil and

502
00:26:20,080 --> 00:26:22,800
Speaker 3: gas production. Their share price went up by twenty percent,

503
00:26:23,119 --> 00:26:25,919
Speaker 3: so the promised to produce more oil and gas than

504
00:26:25,960 --> 00:26:28,720
Speaker 3: plant and their shurprise went up substantially, so I think

505
00:26:28,760 --> 00:26:32,080
Speaker 3: the public equity markets at the moment are a bit

506
00:26:32,680 --> 00:26:36,960
Speaker 3: I would say polarized. There is a large but shrinking

507
00:26:37,320 --> 00:26:39,960
Speaker 3: part of the public acuity market that simply wants oil

508
00:26:40,000 --> 00:26:43,560
Speaker 3: and gas production and oil and gas exposure. And then

509
00:26:43,600 --> 00:26:46,240
Speaker 3: there's an even larger part of the public equity markets

510
00:26:46,280 --> 00:26:51,000
Speaker 3: that wants to invest in EG compliant or related shares.

511
00:26:51,280 --> 00:26:53,960
Speaker 3: The problem that these integrated oil and gas companies have

512
00:26:54,359 --> 00:26:57,160
Speaker 3: is that whenever they announced their going let's say, from

513
00:26:57,200 --> 00:27:00,320
Speaker 3: five percent renewables to ten percent or five to fifty,

514
00:27:00,840 --> 00:27:03,480
Speaker 3: then the part of the equity market that wants oil

515
00:27:03,480 --> 00:27:07,199
Speaker 3: and gas exposure divests because that's not what they are

516
00:27:07,240 --> 00:27:09,480
Speaker 3: looking for. They want oil and gas exposure. They either

517
00:27:09,560 --> 00:27:11,840
Speaker 3: don't want these companies to invest in the energy tradition

518
00:27:11,960 --> 00:27:13,720
Speaker 3: or they don't believe in the energy tradition, but they're

519
00:27:13,720 --> 00:27:15,840
Speaker 3: looking for oil and gas exposurem So they divest or

520
00:27:15,880 --> 00:27:18,399
Speaker 3: in these apportion divest But the ESG part of the

521
00:27:19,000 --> 00:27:21,000
Speaker 3: or the equity market, that's a very powerful part of

522
00:27:21,000 --> 00:27:23,760
Speaker 3: the equity market, doesn't yet invest because it only wants

523
00:27:23,800 --> 00:27:27,240
Speaker 3: to invest if these companies achieve forty or fifty percent

524
00:27:27,440 --> 00:27:30,119
Speaker 3: green energy penetration. So it's a very hard journey to make.

525
00:27:30,200 --> 00:27:32,600
Speaker 3: So at the moment, I would say the public equity

526
00:27:32,680 --> 00:27:36,400
Speaker 3: markets reward pure place. You're either in oil and gas

527
00:27:36,680 --> 00:27:39,680
Speaker 3: and you develop it and then you get share price appreciation,

528
00:27:40,040 --> 00:27:42,000
Speaker 3: or you are a green company and you develop that.

529
00:27:42,440 --> 00:27:45,400
Speaker 3: But there are very few public equity investors that want

530
00:27:45,440 --> 00:27:48,520
Speaker 3: to invest in the journey. My private equity investors don't

531
00:27:48,520 --> 00:27:50,280
Speaker 3: want anything else but to invest in the journey. I

532
00:27:50,320 --> 00:27:52,880
Speaker 3: think there's a real tension there where for the large

533
00:27:52,920 --> 00:27:55,600
Speaker 3: companies in the industry, it is hard to find the

534
00:27:55,640 --> 00:27:59,639
Speaker 3: trajectory to lead in the carbonization if the equity markets

535
00:27:59,640 --> 00:28:01,200
Speaker 3: are not willing to buy into that.

536
00:28:01,760 --> 00:28:04,040
Speaker 2: It's a really interesting and insightful point, and I agree

537
00:28:04,119 --> 00:28:07,879
Speaker 2: there's something about stability and clarity that's provided by some

538
00:28:08,080 --> 00:28:10,960
Speaker 2: insulation from the public markets. I want to expand the

539
00:28:11,040 --> 00:28:13,040
Speaker 2: lens of this conversation just talk a bit about the

540
00:28:13,080 --> 00:28:15,280
Speaker 2: situation here in Europe, where you and I both live,

541
00:28:15,480 --> 00:28:18,440
Speaker 2: and also more broadly about the global decoupling and the

542
00:28:18,480 --> 00:28:21,480
Speaker 2: growth of international competition. But maybe just starting here in

543
00:28:21,560 --> 00:28:23,800
Speaker 2: Europe and the energy crisis. Do you see that the

544
00:28:23,880 --> 00:28:26,840
Speaker 2: worst is now behind us in terms of this energy crisis.

545
00:28:27,080 --> 00:28:28,840
Speaker 2: We now have this oil price cap that seems to

546
00:28:28,880 --> 00:28:31,000
Speaker 2: be doing its job. We have gas stories that seems

547
00:28:31,040 --> 00:28:34,120
Speaker 2: like it's at a reasonable level after winter. What's your

548
00:28:34,240 --> 00:28:36,959
Speaker 2: thought on kind of the prognosis and do you think

549
00:28:37,000 --> 00:28:38,400
Speaker 2: we've weathered the worst of the storm.

550
00:28:39,000 --> 00:28:43,080
Speaker 3: So a few points, the situation is clearly a lot

551
00:28:43,200 --> 00:28:46,800
Speaker 3: calmer than it was in twenty twenty two after the

552
00:28:46,920 --> 00:28:50,560
Speaker 3: war started, in particularly summer, when things got really quite stress,

553
00:28:50,640 --> 00:28:53,840
Speaker 3: particularly in decasuallytricity markets. I would make a distinction between

554
00:28:53,880 --> 00:28:56,960
Speaker 3: liquids and gas. I think the oil and oil products

555
00:28:57,040 --> 00:29:00,360
Speaker 3: markets have settled more or less with the Russian ancients

556
00:29:00,360 --> 00:29:03,160
Speaker 3: in place, the oil and products keep flowing. The logistics

557
00:29:03,200 --> 00:29:05,360
Speaker 3: are a bit more difficult, are all kinds of issues

558
00:29:05,440 --> 00:29:08,120
Speaker 3: with the quality of ships that bring the Russian cruder

559
00:29:08,160 --> 00:29:10,800
Speaker 3: products to their new end customers, et cetera. So so

560
00:29:10,800 --> 00:29:14,080
Speaker 3: I wouldn't say it's it's completely normal, but it's kind

561
00:29:14,120 --> 00:29:17,280
Speaker 3: of settled. And so to me, the liquid markets will

562
00:29:17,320 --> 00:29:21,720
Speaker 3: simply going forward again be driven by supplying demand, and

563
00:29:21,840 --> 00:29:25,000
Speaker 3: we do believe supply has been underinvested, so oil prices

564
00:29:25,680 --> 00:29:28,440
Speaker 3: likely to be relatively strong going forward. But that market

565
00:29:28,480 --> 00:29:31,320
Speaker 3: has kind of settled, and I wouldn't expect there to

566
00:29:31,440 --> 00:29:34,960
Speaker 3: be any panic moments left. I think on the gas market,

567
00:29:35,200 --> 00:29:38,600
Speaker 3: Europe has been successful and lucky. It's been successful in

568
00:29:38,720 --> 00:29:43,000
Speaker 3: attracting supply from other sources and in suppressing demand. But

569
00:29:43,080 --> 00:29:45,040
Speaker 3: it's also been very lucky that the winter was one

570
00:29:45,040 --> 00:29:47,280
Speaker 3: of the warmest winters on record, and therefore the heating

571
00:29:47,320 --> 00:29:49,760
Speaker 3: demand was so much lower than average, and those two

572
00:29:49,800 --> 00:29:52,760
Speaker 3: factors have led now to quite a calm situation in

573
00:29:52,800 --> 00:29:55,120
Speaker 3: the gas market. I think that it's too early to

574
00:29:55,240 --> 00:29:59,520
Speaker 3: declare victory on that. If we get resurging China demand,

575
00:30:00,360 --> 00:30:03,640
Speaker 3: Asian demand for gas, which was also quite suppressed last

576
00:30:03,720 --> 00:30:06,040
Speaker 3: year because of COVID and other reasons, if it all

577
00:30:06,080 --> 00:30:08,040
Speaker 3: comes back into the market and we have a very

578
00:30:08,160 --> 00:30:10,640
Speaker 3: cold twenty three to twenty four winter, and the gas

579
00:30:10,840 --> 00:30:13,280
Speaker 3: situation could still be tied. But we still have to

580
00:30:13,480 --> 00:30:16,040
Speaker 3: get through one or two winters on the gas before

581
00:30:16,080 --> 00:30:18,960
Speaker 3: we can really say that that situation is also settled.

582
00:30:19,240 --> 00:30:21,720
Speaker 3: So we'll see how it goes next winter. But I

583
00:30:21,760 --> 00:30:23,840
Speaker 3: think the models now in place to respond to are

584
00:30:23,840 --> 00:30:25,760
Speaker 3: a lot better than nowhere a year ago, so I

585
00:30:25,760 --> 00:30:27,560
Speaker 3: don't think we'll get to the very extremes that we

586
00:30:27,600 --> 00:30:29,800
Speaker 3: saw last year anymore, but could still be tense, but

587
00:30:29,920 --> 00:30:33,360
Speaker 3: one of the important structural points is that Europe will

588
00:30:33,440 --> 00:30:36,920
Speaker 3: never again go back to depending so much on Russia

589
00:30:37,040 --> 00:30:39,120
Speaker 3: when it comes to gas, and therefore it will become

590
00:30:39,240 --> 00:30:42,800
Speaker 3: a structural energy importer and that will impact the long term.

591
00:30:42,920 --> 00:30:45,560
Speaker 3: Gas price in Europe will go as a result, because

592
00:30:45,680 --> 00:30:48,680
Speaker 3: energy prices will be higher than the Russian sply used

593
00:30:48,720 --> 00:30:51,320
Speaker 3: to be, and that will have impact on the gas market,

594
00:30:51,360 --> 00:30:54,680
Speaker 3: the electricity market, and the competitiveness of Europe for industry,

595
00:30:54,680 --> 00:30:55,080
Speaker 3: et cetera.

596
00:30:55,600 --> 00:30:58,160
Speaker 2: That's really interesting and I think that's not too dissimilar

597
00:30:58,200 --> 00:31:00,280
Speaker 2: to the view that our team has over the next year,

598
00:31:00,280 --> 00:31:02,200
Speaker 2: this question of the rebound in Asia and in China

599
00:31:02,360 --> 00:31:04,560
Speaker 2: and offset against the potential weather for Europe for the

600
00:31:04,600 --> 00:31:06,560
Speaker 2: coming year. It's interesting as well to think about how

601
00:31:06,600 --> 00:31:09,200
Speaker 2: climate change has already impacted that balance by giving us

602
00:31:09,240 --> 00:31:11,920
Speaker 2: a warm winter, which we're thankful for, but also limiting

603
00:31:12,000 --> 00:31:14,120
Speaker 2: hydro output last year, which we're less thankful for.

604
00:31:14,560 --> 00:31:17,120
Speaker 3: And let's not forget that warm summers also mean a

605
00:31:17,200 --> 00:31:19,880
Speaker 3: lot of air conditioning demand in many places that burn

606
00:31:20,000 --> 00:31:23,000
Speaker 3: gas repout, So it's not a climate change a way

607
00:31:23,080 --> 00:31:23,840
Speaker 3: a lot of one way.

608
00:31:23,680 --> 00:31:26,320
Speaker 2: Street indeed, right, that's right. And then of course you

609
00:31:26,360 --> 00:31:29,120
Speaker 2: know the European response, or one of the elements of

610
00:31:29,120 --> 00:31:31,640
Speaker 2: the European response to this crisis has been to increase

611
00:31:31,680 --> 00:31:34,400
Speaker 2: its ambition and accelerate the energy transition and try to

612
00:31:34,480 --> 00:31:36,680
Speaker 2: remove more of the blockers. How do you see that

613
00:31:36,840 --> 00:31:38,800
Speaker 2: now that we're more than a year into this crisis,

614
00:31:38,920 --> 00:31:40,840
Speaker 2: do you think we're starting to see the impact of

615
00:31:40,920 --> 00:31:43,760
Speaker 2: that acceleration, that that ambition can be delivered or do

616
00:31:43,840 --> 00:31:45,520
Speaker 2: you still see plenty of challenges ahead.

617
00:31:45,760 --> 00:31:49,200
Speaker 3: So I'd say that the rebouwer EU ambitions by and

618
00:31:49,360 --> 00:31:53,720
Speaker 3: large are the correct response to the crisis. I think

619
00:31:53,800 --> 00:31:56,600
Speaker 3: it is to me, for anybody who takes energy transitions,

620
00:31:56,600 --> 00:31:59,240
Speaker 3: here is obvious that the thing to do is to

621
00:31:59,480 --> 00:32:04,640
Speaker 3: mix out on growing green energy in Europe, both electricity

622
00:32:04,800 --> 00:32:08,520
Speaker 3: and green molecules, and then if that doesn't provide all

623
00:32:08,560 --> 00:32:11,520
Speaker 3: the answer to the energy crisis, then to develop more

624
00:32:11,600 --> 00:32:15,800
Speaker 3: fossil supply into Europe, either energy or pipeline from neighboring countries,

625
00:32:15,800 --> 00:32:18,520
Speaker 3: et cetera, and embedance system in that way. So I

626
00:32:18,600 --> 00:32:21,760
Speaker 3: think the ambition and the targets are the right ones.

627
00:32:22,040 --> 00:32:25,280
Speaker 3: What I haven't seen enough of is turning that into practice.

628
00:32:25,440 --> 00:32:28,800
Speaker 3: I would have wanted and expected more of a wartime

629
00:32:28,880 --> 00:32:33,200
Speaker 3: effort to kickstart the biofuels and green hydrogen industries, to

630
00:32:33,640 --> 00:32:37,240
Speaker 3: already be constructing large projects, to already be breaking ground

631
00:32:37,320 --> 00:32:40,840
Speaker 3: on pipelines, et cetera, to really change the approach and

632
00:32:41,320 --> 00:32:45,760
Speaker 3: remove some of the permitting blockers, but also other blockers

633
00:32:45,800 --> 00:32:48,200
Speaker 3: that stand in the way of you're moving so much

634
00:32:48,240 --> 00:32:52,960
Speaker 3: more quickly to that new energy system. All those ideas

635
00:32:53,040 --> 00:32:57,479
Speaker 3: exist in results about permitting zones and go to areas

636
00:32:57,520 --> 00:33:00,640
Speaker 3: they call them, about moving faster by lines and only

637
00:33:00,680 --> 00:33:03,720
Speaker 3: electrolyizers and on biofields, but it's taken quite a lot

638
00:33:03,720 --> 00:33:06,440
Speaker 3: of time for them to be agreed at the European

639
00:33:06,560 --> 00:33:08,640
Speaker 3: level and then for them to find their way down

640
00:33:08,680 --> 00:33:12,160
Speaker 3: to local legislation, et cetera, in order for implementation to

641
00:33:12,240 --> 00:33:14,040
Speaker 3: be able to start. So I think most of the

642
00:33:14,200 --> 00:33:17,400
Speaker 3: right ideas, correct ideas, are around, but driving them into

643
00:33:17,440 --> 00:33:21,960
Speaker 3: implementation is slower than necessary in my view, and certainly

644
00:33:22,000 --> 00:33:25,160
Speaker 3: slower than what Europe needs, and that still needs work.

645
00:33:25,240 --> 00:33:27,640
Speaker 3: In the meantime, of course, we've had the IRA in

646
00:33:27,680 --> 00:33:32,080
Speaker 3: the US, which gives very significant supply incentives to the

647
00:33:32,200 --> 00:33:34,960
Speaker 3: market there, and that's certainly a wake up call for

648
00:33:35,040 --> 00:33:38,400
Speaker 3: Europe is trying to respond within its own limits, score

649
00:33:38,480 --> 00:33:42,080
Speaker 3: of tools that the European Union has and the countries

650
00:33:42,080 --> 00:33:44,160
Speaker 3: are allowed to have. My sense is that that could

651
00:33:44,200 --> 00:33:46,840
Speaker 3: still end up in the right place because where Europe

652
00:33:46,840 --> 00:33:48,720
Speaker 3: at the moment is struggling a bit to copy the

653
00:33:48,880 --> 00:33:52,360
Speaker 3: IRA supply site incentives and will need to step up further.

654
00:33:52,720 --> 00:33:55,800
Speaker 3: It has very significant demand side incentives, and there's the

655
00:33:55,880 --> 00:33:59,160
Speaker 3: etes the price on carbon in terms of the framework

656
00:33:59,320 --> 00:34:03,040
Speaker 3: for adopting sustainable aviation fuel and hopefully maritime is sustainable

657
00:34:03,120 --> 00:34:05,560
Speaker 3: maritime fuels, and that's missing in the US. The US

658
00:34:05,640 --> 00:34:08,359
Speaker 3: has very significant supply side incentives and l the IRA

659
00:34:08,560 --> 00:34:11,719
Speaker 3: is very clear, simple piece of legislation, well done, but

660
00:34:11,880 --> 00:34:14,680
Speaker 3: it still needs demand side incentives such as carbon prices

661
00:34:14,800 --> 00:34:16,920
Speaker 3: or other ways to stimulate demand. So I think the

662
00:34:17,120 --> 00:34:19,839
Speaker 3: race is still on between Europe and US internal who

663
00:34:19,840 --> 00:34:23,680
Speaker 3: will actually be the quickest to develop a green energy

664
00:34:23,719 --> 00:34:24,480
Speaker 3: transition industry.

665
00:34:24,760 --> 00:34:26,560
Speaker 2: I think that's a really fascinating point. And I was

666
00:34:26,600 --> 00:34:28,600
Speaker 2: actually going to ask you that exact question, to what

667
00:34:28,719 --> 00:34:30,960
Speaker 2: extent do you think this narrative around the green investment

668
00:34:31,040 --> 00:34:34,000
Speaker 2: case in Europe being undermined by the US is really true?

669
00:34:34,280 --> 00:34:36,319
Speaker 2: But maybe a follow on question to that, I think

670
00:34:36,400 --> 00:34:38,400
Speaker 2: one of the observations is that there's now more of

671
00:34:38,440 --> 00:34:43,320
Speaker 2: a race around the green manufacturing jobs, the industrial production

672
00:34:43,480 --> 00:34:46,239
Speaker 2: jobs of the technology for the energy transition. So I'd

673
00:34:46,239 --> 00:34:47,920
Speaker 2: be curious to know if you have a view on

674
00:34:48,320 --> 00:34:51,560
Speaker 2: how important that piece is versus just getting on with

675
00:34:51,640 --> 00:34:53,800
Speaker 2: deploying projects at the downstream. I don't know if you

676
00:34:53,840 --> 00:34:57,880
Speaker 2: ever thought on how important those green manufacturing jobs really are.

677
00:34:58,280 --> 00:35:01,520
Speaker 3: Yeah, I think it is seem to see how we've

678
00:35:01,600 --> 00:35:05,759
Speaker 3: always seen the energy transition and get into one point

679
00:35:05,840 --> 00:35:09,840
Speaker 3: five degrees as a collaborative global effort, or an effort

680
00:35:09,880 --> 00:35:12,400
Speaker 3: that had to that in order to succeed, had to

681
00:35:12,440 --> 00:35:15,280
Speaker 3: be collaborative. What we now see it is actually becoming

682
00:35:15,360 --> 00:35:19,080
Speaker 3: more competitive between the Europe and the US, between China,

683
00:35:19,239 --> 00:35:21,560
Speaker 3: Europe and US, the energy tangition is becoming more of

684
00:35:21,600 --> 00:35:24,160
Speaker 3: a competition than a collaboration. We hope it's both, but

685
00:35:24,760 --> 00:35:27,520
Speaker 3: I actually think that's probably not a bad thing because

686
00:35:27,560 --> 00:35:30,680
Speaker 3: competition in general has brought many good things to society,

687
00:35:30,880 --> 00:35:34,360
Speaker 3: and it can bring progress on energy transition, then then

688
00:35:34,440 --> 00:35:37,040
Speaker 3: bring it up. I think the focus on manufacturing jobs

689
00:35:37,400 --> 00:35:42,760
Speaker 3: is if you take a purely ecomomist few is actually

690
00:35:42,800 --> 00:35:45,000
Speaker 3: not so helpful. You want to create those jobs in

691
00:35:45,040 --> 00:35:49,080
Speaker 3: the places where they are most efficient and then globally optimized.

692
00:35:49,160 --> 00:35:52,480
Speaker 3: But politically it is very very important that we keep

693
00:35:52,760 --> 00:35:55,040
Speaker 3: the population in Europe and the propulation in the US

694
00:35:55,160 --> 00:35:58,800
Speaker 3: and elsewhere, so keep their support of the energy transition.

695
00:35:58,960 --> 00:36:01,480
Speaker 3: So I think in country that tend to lose a

696
00:36:01,520 --> 00:36:04,280
Speaker 3: lot of jobs because of the energy tangition, where for example,

697
00:36:04,360 --> 00:36:07,120
Speaker 3: the car manufacturing industry is a very big employer and

698
00:36:07,200 --> 00:36:09,840
Speaker 3: it is in Spain and it isn't in Germany, the

699
00:36:10,000 --> 00:36:12,640
Speaker 3: notion that driving that energy transition hart will create a

700
00:36:12,680 --> 00:36:16,040
Speaker 3: lot of unemployment could actually cause political support for anty

701
00:36:16,080 --> 00:36:18,680
Speaker 3: tgition to fall away. And so, from a political point

702
00:36:18,680 --> 00:36:21,600
Speaker 3: of view and from a political acceptance point of view,

703
00:36:21,800 --> 00:36:26,200
Speaker 3: being able to sell the energy transition acceleration as something

704
00:36:26,239 --> 00:36:28,840
Speaker 3: that will also bring jobs to the local economy and

705
00:36:28,920 --> 00:36:32,000
Speaker 3: there will also be manufacturing activity and prosperity, et cetera,

706
00:36:32,400 --> 00:36:35,000
Speaker 3: it's probably not actually such a bad idea if that

707
00:36:35,160 --> 00:36:38,800
Speaker 3: accelerates the energy tangition, and if accelerates popular support for it,

708
00:36:39,080 --> 00:36:43,200
Speaker 3: then I think the economic symp optimization of having manufacturing

709
00:36:43,320 --> 00:36:46,200
Speaker 3: jobs in what you might economically call the wrong place

710
00:36:46,360 --> 00:36:49,760
Speaker 3: may actually be worth that acceleration, or worth that public support,

711
00:36:49,800 --> 00:36:52,640
Speaker 3: so I'm I'm not too unhappy about it. I think

712
00:36:52,680 --> 00:36:55,320
Speaker 3: it is one of the biggest biss to energy tangition

713
00:36:55,719 --> 00:36:58,640
Speaker 3: is if it loses popular support, that people start to

714
00:36:58,680 --> 00:37:00,600
Speaker 3: feel that the only thing that does for them is

715
00:37:01,280 --> 00:37:04,800
Speaker 3: make energy more expensive and export jobs, and then I

716
00:37:04,840 --> 00:37:07,480
Speaker 3: don't think we'll be able to get it done anywhere

717
00:37:07,520 --> 00:37:11,120
Speaker 3: near in time. So I'm actually quite sympathetic to efforts

718
00:37:11,200 --> 00:37:14,840
Speaker 3: to continue to raise popular support for the energy transition,

719
00:37:14,960 --> 00:37:18,520
Speaker 3: even if it is economically perhaps not the optimal thing

720
00:37:18,600 --> 00:37:18,719
Speaker 3: to do.

721
00:37:19,120 --> 00:37:20,960
Speaker 2: So I'd like to just drill into that point about

722
00:37:21,040 --> 00:37:24,319
Speaker 2: international competition really, because I think we're entering this era,

723
00:37:24,640 --> 00:37:27,160
Speaker 2: you know, first of all, the marginalization of Russia as

724
00:37:27,160 --> 00:37:30,000
Speaker 2: an energy exporter, which you talked about, and this broader

725
00:37:30,120 --> 00:37:32,920
Speaker 2: rivalry between China and the US, China and the West,

726
00:37:32,960 --> 00:37:35,640
Speaker 2: and concerns about supply chain resilience for the energy transition.

727
00:37:35,880 --> 00:37:38,040
Speaker 2: And I think I detected from your earlier remarks actually

728
00:37:38,040 --> 00:37:40,520
Speaker 2: a sense of optimism that against that backdrop, we can

729
00:37:40,560 --> 00:37:43,959
Speaker 2: still accelerate the energy transition. Is that how you feel

730
00:37:44,000 --> 00:37:46,520
Speaker 2: that even during these complex times, that we can continue

731
00:37:46,520 --> 00:37:48,760
Speaker 2: to push and continue to move faster on that journey.

732
00:37:49,239 --> 00:37:52,920
Speaker 3: I think it's absolutely possible. I think my sense, for example,

733
00:37:52,960 --> 00:37:55,839
Speaker 3: as the IRA may not have existed and read power

734
00:37:55,920 --> 00:37:58,680
Speaker 3: EU may not have existed, is the current conflict in

735
00:37:58,880 --> 00:38:02,160
Speaker 3: Ukraine wasn't there, But I think it has sparked and

736
00:38:02,840 --> 00:38:05,919
Speaker 3: however totally terrible. That is, it has sparked a number

737
00:38:05,960 --> 00:38:09,560
Speaker 3: of important accelerators for the energy tradition that I think

738
00:38:09,640 --> 00:38:12,560
Speaker 3: could have a very very lasting impact on the speed

739
00:38:13,080 --> 00:38:15,880
Speaker 3: and direction of the energy system. It is. It is

740
00:38:16,000 --> 00:38:19,960
Speaker 3: not all easy going, of course, because if you if

741
00:38:20,000 --> 00:38:25,120
Speaker 3: you summarize Europe's approach as becoming lesser even totally independent

742
00:38:25,200 --> 00:38:28,120
Speaker 3: of Russian from an energy perspective, by driving the energy

743
00:38:28,160 --> 00:38:31,440
Speaker 3: tradition hard, then then of course you exchange dependence on

744
00:38:31,920 --> 00:38:34,759
Speaker 3: let's say, fossil fuels to dependence on materials, because the

745
00:38:34,880 --> 00:38:38,919
Speaker 3: energy tradition, the solar panels, the hydrogen plants, et cetera,

746
00:38:39,080 --> 00:38:43,520
Speaker 3: to biofuels are all about materials, and these many of

747
00:38:43,600 --> 00:38:47,560
Speaker 3: these materials you created dependence on China and other parts

748
00:38:47,560 --> 00:38:48,960
Speaker 3: of the world. So if you in a way you

749
00:38:49,040 --> 00:38:51,600
Speaker 3: exchange one dependence for the other, and will need to

750
00:38:51,719 --> 00:38:54,600
Speaker 3: work through the impacts of that, and so so it

751
00:38:54,680 --> 00:38:58,600
Speaker 3: isn't all clear. Sailing but I'm optimistic that the system,

752
00:38:58,800 --> 00:39:02,680
Speaker 3: let's say the EU US China system, will will come

753
00:39:02,719 --> 00:39:06,560
Speaker 3: to an equal equilibrium that allows those materials to flow

754
00:39:06,880 --> 00:39:10,760
Speaker 3: and it allows that energy tradition acceleration to to take place.

755
00:39:11,760 --> 00:39:14,080
Speaker 3: It has been what has been clear to me is

756
00:39:14,120 --> 00:39:18,239
Speaker 3: that energy security is also in Europe very very political

757
00:39:18,400 --> 00:39:22,080
Speaker 3: and sensitivision. It's been quite remarkable last year to see

758
00:39:22,120 --> 00:39:24,760
Speaker 3: that when energy price has got high, Europe was willing

759
00:39:24,800 --> 00:39:29,480
Speaker 3: to spend hundreds of billions subsidizing fossil fuel consumption in

760
00:39:29,640 --> 00:39:32,400
Speaker 3: order to keep its citizens content. And of course the

761
00:39:33,280 --> 00:39:35,640
Speaker 3: European argument for a long time has been that nobody

762
00:39:35,719 --> 00:39:38,640
Speaker 3: should subsidize fossil fuel consumption. And yet when when the

763
00:39:38,719 --> 00:39:41,760
Speaker 3: going got tough last year, European countries together spend hundreds

764
00:39:41,800 --> 00:39:43,600
Speaker 3: of billions on it, and they also switched some co

765
00:39:43,760 --> 00:39:46,000
Speaker 3: fire power plants. So that to me has been an

766
00:39:46,040 --> 00:39:48,880
Speaker 3: extremely important insight last year. Although we all believe in

767
00:39:49,000 --> 00:39:52,560
Speaker 3: energy tradition, and certainly in Europe and US politicians will

768
00:39:52,680 --> 00:39:55,400
Speaker 3: will say that when the going gets tough, energy security

769
00:39:55,440 --> 00:39:58,840
Speaker 3: and affordability quickly come into perhaps or trumpet an agenda,

770
00:39:58,960 --> 00:40:01,920
Speaker 3: but certainly going side with it. And that comes to

771
00:40:02,360 --> 00:40:06,040
Speaker 3: the necessity to increase our efforts to make sure that

772
00:40:06,120 --> 00:40:08,960
Speaker 3: there's not just greener energy, but there's also plentyful and

773
00:40:09,000 --> 00:40:12,040
Speaker 3: affordable energy as we drive the energy transition. I don't

774
00:40:12,040 --> 00:40:14,360
Speaker 3: think that was as clearly on the radar screen as before.

775
00:40:14,960 --> 00:40:17,960
Speaker 3: To me, it just emphasizes the need to scale up

776
00:40:18,480 --> 00:40:20,840
Speaker 3: fast than we have been doing, and indeed about the

777
00:40:21,320 --> 00:40:26,480
Speaker 3: wartime approach to creating clean energy in abundance affordability doesn't

778
00:40:26,800 --> 00:40:28,120
Speaker 3: drive us back into the wrong place.

779
00:40:28,520 --> 00:40:30,600
Speaker 2: Thank you, Martin. I think that's a great place to

780
00:40:30,680 --> 00:40:32,440
Speaker 2: end the conversation, and I agree the challenge we have

781
00:40:32,520 --> 00:40:34,920
Speaker 2: in front of us is to keep accelerating the transition

782
00:40:35,200 --> 00:40:37,960
Speaker 2: but making sure that we're managing and ensuring energy security

783
00:40:38,000 --> 00:40:40,080
Speaker 2: at the same time. Martin, I always learned so much

784
00:40:40,160 --> 00:40:41,480
Speaker 2: when I get to talk to you, so thank you

785
00:40:41,760 --> 00:40:43,600
Speaker 2: very much for sharing your thoughts with all of our

786
00:40:43,640 --> 00:40:45,080
Speaker 2: listeners out there, and I hope we'll get to have

787
00:40:45,200 --> 00:40:47,000
Speaker 2: you back on the show or on stage at one

788
00:40:47,040 --> 00:40:49,799
Speaker 2: of us summit's very soon. Thank you, no thanks.

789
00:40:49,840 --> 00:40:52,120
Speaker 3: I'll be keen to report on our promise. We are

790
00:40:52,440 --> 00:40:56,320
Speaker 3: undergoing probably the fastest transformation of any energy company in

791
00:40:56,400 --> 00:40:58,400
Speaker 3: the world, and if we can prove that it can

792
00:40:58,480 --> 00:41:00,359
Speaker 3: be done, as I'm sure we will. I hope many

793
00:41:00,400 --> 00:41:03,160
Speaker 3: others will follow, and we can look back over a

794
00:41:03,239 --> 00:41:06,120
Speaker 3: decade of progress eventually, rather than a decade of trouble.

795
00:41:06,239 --> 00:41:08,239
Speaker 3: But thanks for your time. Then over there for the

796
00:41:08,280 --> 00:41:09,239
Speaker 3: opportunity to be with you.

797
00:41:09,520 --> 00:41:10,200
Speaker 2: Thank you very much.

798
00:41:19,239 --> 00:41:22,240
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799
00:41:22,400 --> 00:41:25,839
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