Financial Services Association, March 28 (Editor: Xiaoxiang) Just like more than a century ago, the world's largest oil company is now once again setting its sights on places far from home in an attempt to gain a head start on a new “racetrack.” However, unlike a century ago, when they tried to extract rich oil and gas resources from under the surface, this time they wanted to bury industrial emissions that would warm the planet.

According to industry insiders, carbon sequestration is increasingly becoming a potential multi-billion dollar revenue source for global energy giants such as ExxonMobil, Shell, and Chevron, and these companies are facing global pressure to control the uncontrolled burning of fossil fuels.

In Asia, which is likely to account for most of the world's carbon emissions in this century, Indonesia and Malaysia are among the few places where carbon can be stored underground after being captured. And the global energy giants mentioned above, which have strong capital and rich technical experience, are trying to “take the lead” in these countries...

Lein Mann Bergsmark, head of carbon capture, utilization, and storage (CCUS) research at consulting group Rystad Energy, said, “This is a competition. More and more oil and gas companies are working to obtain carbon dioxide sequestration rights and pore space on a global scale.”

Carbon sequestration is the final step in the carbon capture and storage (CCS) process. The technology aims to capture carbon dioxide from the atmosphere and permanently bury it on the seabed or underground, theoretically neutralizing the impact of carbon dioxide emissions on climate change.

For oil companies, the widespread application of CCS is also a “lifeline” for them, although this “lifeline” may be very thin: According to the International Energy Agency (IEA), the widespread application of CCS means they can maintain 20% of their current oil and gas needs until 2050 without causing global warming above the levels set by the Paris Agreement. And without CCS, oil and gas consumption would need to fall further. The technology could also provide a new revenue stream for these energy companies — companies can rent out storage space for a fee.

Currently, there is a huge global gap between the amount of carbon dioxide that needs to be captured and the storage space available.

According to IEA data, to meet global climate goals, more than 1 billion tons of carbon dioxide will need to be captured and stored each year by 2030. But today, there are only a few dozen commercial storage sites around the world, and only 4% of them are covered.

Part of the problem is economics. In the high-end market, it can cost more than $1,000 to capture and bury a ton of carbon dioxide — depending on where the gas comes from. Without a strong price for carbon emissions, oil companies cannot make lower-cost capture and storage projects economically viable.

In addition, there are political factors — in the US, strong opposition from environmentalists and local residents has delayed the licensing and construction of gas storage wells. At a public hearing last summer, dozens of people argued that state regulators were incapable of overseeing injection wells and warned that poor regulation could cause the injection well to burst.

Geology is also a limiting factor. There are two types of underground space where carbon dioxide can be injected. One is a deep permeable rock layer called a saline underground aquifer, and the other is an old, depleted oil well and gas well.

Analysts say that in Asia, Japan, South Korea, and Singapore are all major carbon dioxide emitters, but they lack soil characteristics to permanently deposit enough carbon dioxide, which means they need to export the carbon dioxide to be buried elsewhere in the region. Singapore recently commissioned ExxonMobil and Shell to help them determine the scope of applicable overseas storage sites.

Oil giants target Southeast Asia

In response, global oil giants are turning their attention to Southeast Asia.

ExxonMobil CEO Darren Woods said the company has “acquired exclusive rights to carbon sequestration” in Indonesia and Malaysia. He told business leaders at the San Francisco summit in November last year that world-class issues like climate change require world-class companies to help solve them.

ExxonMobil signed an agreement with Pertamina last year to develop a storage facility worth 2.5 billion US dollars.

Shell, on the other hand, has signed an agreement with Petronas to inspect possible locations. Chevron is also studying a project in Indonesia.

France's Total Energy Company is also actively exploring the region's storage potential. Total Energy invests approximately $100 million in global CCS development every year, and Etienne Anglès d'Auriac, the company's CCS vice president, said this figure could triple by the end of this decade.

Meanwhile, the Indonesian government hastily passed a presidential decree last month providing possible incentives for carbon dioxide sequestration operators. These companies will be able to apply for licenses that are valid for up to 30 years. A government spokesman said the amount of taxes and royalties these projects will generate is still under discussion. According to reports, Europe and Australia are currently implementing similar plans.

Emry Hisham Yusoff, head of the carbon management department at Petronas, said, “Major emitters in Asia will come to us. What they want is a guarantee that it can be sealed.”

Emry said that Malaysia currently has no clear carbon dioxide import legislation, and the company is seeking to develop three storage centers that can store up to 15 million tons of carbon dioxide per year by 2030. He said, “There are a lot of people who are pushing to speed up this work. We're trying to learn from each other.”

A spokesman for the Malaysian Ministry of Economy said that the department is conducting a “comprehensive study” on the development of CCUS and plans to enact a draft law on carbon dioxide import and storage in the first quarter of 2025. Malaysia expects it to have more storage space than it needs, and leasing this space will reduce the need for government subsidies.

Of course, Indonesia and Malaysia themselves also have their own carbon emissions that need to be captured and buried. This challenge prompted Jakarta to say that 70% of Indonesia's potential storage space will be reserved for domestic emissions.

Chris Stavinoha, general manager of CCUS solutions for the Asia Pacific and Middle East at Chevron, said, “You can think of Korea or Japan as a huge market looking for homes for emissions.” He said the company expects “great interest” in the limited space, particularly in Southeast Asia.

According to estimates by Norwegian energy consulting firm Rystad Energy, carbon dioxide transportation and storage in Southeast Asia could generate about $16 billion in annual revenue by 2050, but this depends on the region's storage capacity, and the forecast results vary greatly.

Yu Li Ping, general manager of CCS at Shell Asia Pacific, said, “Cooperation between industry and government has really strengthened over the past few years. This momentum is expected to continue to grow.”