Ex-BP CEO Bob Dudley on Big Oil Going Green

about this low carbon future. This week on the show, we've got Bob Dudley, Chairman of the Oil and Gas Climate Initiative or o g c I, an international industry lead initiative established in fourteen. The idea behind the o g c I is that member companies come together to take practical action on climate change and accelerate the reduction of greenhouse gas emissions in full support of the Paris Climate Agreement and its aims. Bob joined the oil and

gas industry in nineteen seventy nine. He's had a variety of engineering, commercial and management positions worldwide, including serving as Group Chief Executive of BP from to March of this year. My co host Dana Perkins, who also heads up Europe Middle East and Africa for BNF. Did this interview as part of the BENF London Summit on October nineteenth. Being a users can see this interview and more, including all the BENF analyst talks from the summit, on BNF dot com,

the Being mobile app in the Bloomberg terminal. As a reminder, bean If does not provide investment strategy advice, and you can hear the full disclaimer at the end of the show him Mark Taylor, and you're listening to twitch On. Now over to Dana for her interview with Bob Dadley. Thank you for joining us today. Good morning Dana and everyone. Good to be here. This is a treat for me to be able to interview you. So let's dive in

with the first question. So I have that for many companies, emission reductions targets are really paris aligned and focused around the year. But at the o g c I, you've chosen to look a little bit nearer term and looking closer five years into the future. So why was the

choice made to focus emissions reductions targets on the nearer term. Well, the o g c I are the Oil and Guest Climate Initiative is twelve of the biggest companies in the world, and we thought it would maybe be too easy to put a number out there in so we set near term targets, worked out methodology together. We set targets in twenty set a baseline seen targets. We have rigorously gone through and and measured. Third parties have verified our numbers

and on two targets, one is methane reduction targets. We set a target of point to five by came in at point to three percent this year, so ahead of where we thought we would be in twenty So that's really good news. And this allows us then to keep pushing ourselves, sharing information and data, and keep rigorously moving towards the targets which I'm sure we'll set to point to next in a near short time. We've done the same thing with a carbon intensity target on our upstream operations.

This is really good news, better outcome than we ever expected as we started. It's still a long way to go, though, so why do you not also have a long term goal that's kind of further out into the future that you're also working towards, Because it looks like you're going to continue to beat the short term goals. Well, it's a it's twelve companies. Three of them in national oil companies and and and the others are international oil companies.

Some of them require their governments to approve the long term targets, but many of the individual companies have set targets out there at targets or earlier in different metrics. But this is a collective. It's a big collective. So we do what we can do. And it's actually easier to set a target shorter term and then push rather than the really one far out on the horizon. What are the best ways that the O g C I has I guess among the members and the collective to

hold each other accountable. Well, we we we get together. We avoid anto the antitrust issues which you have to We never talked about oil prices. But when we do get together, we talk about the technology, We talk about new ideas, we talk about things that we're doing in the field, and collectively, we've also set a billion dollar fund to clean technologies, many of which involve the monitoring, the detection, the measurement of of methane emissions, for example,

using on surface technolo oologies, drones and satellites. We just launched the second satellite with the company we invest in. So we do it through our investments, and then we also allow those companies that we invest in to use our big sets of assets around the world to do pilot projects and test things. Uh, and then we share

all that data and information. So it's it's truly something unusual I think among big sectors and industries that the big players in the in the sector come together to try to all work together towards reducing emissions and our carbon intensity and our footprints. And by doing that creates a little bit of internal competition as well among the company.

So it's a good mechanism and it's it's come a long way, I would say since it started about Yeah, how does that work in practice among the conversations with the organizations because in theory they well not in theory, in reality they are competing against one another and yet are working towards this common objective. How do you create that environment where they can kind of put the competitive

part way and and work together as a team. Well, one thing about all these companies is they're deeply committed to achieving the goals of Paris. It's absolutely built into all of their strategies. All of them have different portfolios, so it makes a little different for the companies themselves, but we're all committed to a common goal and you almost have to get a group of companies like these to develop a common language. So the actual calculations what you do doing it all the same way has has

taken quite a bit of technical time. So when we get together we talk about the pressures that we have. We also have, you know, the pressure the energy transition is there, the COVID pressures are down on demands, is enormous pressures on all the companies, and you'll see them having a restructure right now as well, and their portfolios are changing, some at different paces than others. And we

don't talk about individual strategies so much. But the one thing about the oil and gas industry, and I have thought about this for a long time, I don't think there is another industry in the world that competes so fiercely but also partners uh in big projects around the world.

And that's partly because of national oil companies work within the national oil companies and projects together, and the size and sheer scale of the capital was always so great that it was rare actually that one company wanted to take on all the capital on one of these big projects. So it's a unique kind of industry and it leads to competition, s fierce competition as well as a cooperation that's very unusual. It would be good to see on

climate other sectors taking this on as well. You could see cement or chemicals, or steel or aluminum would be a good thing if they could do this as well. Yeah, so how does the knowledge sharing work? So let's say somebody listening now is in chemicals or steel. How do you go about sharing that information with each other? And

what are the various forms that exist. Well, one of the things when we set this up, Dana, was that we said the Oil and Gas Climate Initiative needed to be CEO lad There's a lot of organizations that were all part of but the CEOs themselves needed to remain deeply committed to it and that's important and that takes

a lot of CEO time. So underneath that, though, we have a series of work streams that work on the gas, the methan initiation missions, we have low carbon fuels work streams, so we have people that are brought into counted in from each of the companies. We have a permanent staff and o g c I that manages the work streams.

And in addition that big commitment to the billion dollar fund that in itself is has people's its own board from the companies as well, so we have representatives that that supervised this, so that knowledge sharing happens at multiple levels in the company, not just the CEOs, but the CEOs do get together and talk about it and steer it and like to be frequently updated on things. So the organization probably has maybe forty people working in O g c I. For O g c I multiple seconds,

and then of course the CEOs. It works pretty well. Took a while, it's a little bit like managing the u N but it's taken a while and now it's real and moving. It got buy in from the top, so that makes a world of difference. Well, let's talk about the members a little bit. They're comprised of international oil companies and national oil companies, but a lot of the climate news is really very much focused around these

international oil companies. What part do you think the national oil companies and even smaller oil companies really have to play in the story, And how how can you balance

out that narrative. Well, then that's a good point. I mean, most of the attention seems to be attracted by the international oil companies, the io c s in Europe and in the US, but this organization goes way beyond it, and it has the Chinese national petroleum companies CNPC, Saudia Ramco has been involved from the very beginning, and Petrobras

in Brazil, so they're involved. Sometimes getting their approvals requires government approvals to move some of the things we are doing for so they managed a little bit different, but the CEO has all work together and so everybody learns from them. I think the environments that people work in

are different. So you have you have investors putting a lot of pressure on some of the companies, maybe less so on some of the national oil companies, or depending on the geographies, you have E. S G Investing now putting a lot of emphasis on this, and they can invest only in certain companies. So it is a variety. But the fact that they're all committed to it is important. We have debated and talked about it as a group many times. Should we expand the membership, But quite frankly,

this is thirty it has. We want to be leaders in it. The technologies we developed were certainly up for sharing with people, but don't want the organization to get too big that it's hard to do things collectively on it. So we do share the information with smaller companies and some of the other national oil companies. We just have had to because it's not that big an organization, practically

kind of limited at this. And again, this is thirty percent of all the oil and gas production, and collectively the numbers of methane emissions and the carbon intensity upstream operations, they really are sort of a benchmark that any company could and should use, and these are some of the best companies in the world when you look at the numbers. Let's talk a little bit about those emissions, so specifically scope three emissions which are just notoriously difficult to measure.

What are your views around the best way to approach this from the o g c I members and where should the emphasis really be placed on emissions reduction where there might actually be some progress? You right, around nine percent of the emissions from oil and gas come from the operations itself of carbon dioxide and make any emissions come from that production and processing of things. We're all working with our customers to look at how they can

reduce their footprints. And that's essentially what you know. Scope three is how people use the fuels and the products that are there. I have to say there's quite a little spectrum of what a Scope three emission is. It's quite a definitional issue that needs to be worked out. O g c I is working together to come up with it, just like we did on the others. It takes a while. Common definition for Scope three or downstream emissions.

I think we're about there on refining definition On refining emissions, it takes a lot of time, and just know everybody's committed to it and no g c I, but scope three. People throw around Scope three and it just needs a tighter definition. People to use it outside of the industry are all talking about different things as well, often but obviously getting the intensity carbon intensity the fuels down. We

have work streams on that. That's one way of doing it, and then of course directly working with different sectors and customers. Another example might be in that billion dollar fund dimensioned. We've invested with a company cement company that actually takes CEO two out of the atmosphere and captures it in the cement That could be revolutionizing as an example. But there's a lot of intended energy intensive industries that we're

all working with. Airlines, aluminum, steel, cement. Yeah, there's some really big ways to make I guess a meaningful impact in these hard to abate sectors. And of those, you know, I guess you're saying that the first place is to create the definition. So so maybe the solutions aren't yet there, But where do you think might be some of the

immediate partners you mentioned airlines? Do you think there are other areas within Scope three that O, G, C, I, S or just the members are going to be able to reach out to and get some meaningful kind of progress Because you have you have to make that interlinkage as well. So cement is one we're working on. We were invested in a cement company that does the process different differently and so suddenly that's getting a lot of attention. So this cement industry. Cement gives off a lot of

here too. For example, steel processing, we're working with some of the steel companies on how they process things, and the individual companies have their own relationships with big customers. So this is another big area for us to move into as O g C I and the individual companies it will come. This is probably the hardest area. Actually, we will continue to watch this space well. So let's talk about some of the path forward in terms of

kind of the current climate right now. What areas do you think maybe aren't getting enough attention that should be

getting attention. And this has to do with the fact that I think everybody's sort of looking for some sort of technology development or something that could pose as a green swan, if you will, that's going to really move the agenda forward because to your point earlier regarding short term emissions, short term emissions reduction goals and longer term emissions reduction goals, some of those longer term emissions reduction schools, we don't really know how we're going to get there.

So what do you think could be a potential green swan. There's probably not a silver bullet out there, but we should certainly try to get as many of these bullets as we can. And one that I think the public in general doesn't know much about and their eyes kind of glaze over when they hear things like ccus or CCS so that's carbon capture u since storage or carbon capture and storage. That's one area that o g c I is focusing a lot on. There's about thirty c

c US projects around the world out there. Almost any scenario that I've seen to get to the goals of

Paris are going to require carbon capture and storage. So we've we've looked at five kickstarter programs around around the world that we're looking at, one of the Netherlands, Norway, the US, when China and the UK UH and o g c I, the Climate Investment Group actually spent quite a bit of money laying out the technology and helping the UK government developed the policy that encourages a big project in the UK called net and zero t side, which will take a lot of industrial complexes and capture

the CEO two and then it can be piped offshore and put way back down to the ground where originally came from as an example, and these can make big

differences in the emissions profile of the world. It's not the green Swan, I think, but it's an important one and so we're working with governments like the US is fort Q, which is a policy that is in the US probably the best policy initiative in the world really to enable it big one around Rotterdawn Harbor, to create a ring around the Big Harbor, and the industrial complexes also take that out and put it under the ground

as an example. And then further down the road, i'd expect CO g c I to get involved with hydrogen. Hydrogen is going to be a big, big contributor to this, and I'll just remind people that don't like natural gas, and natural gas is really three carbon atoms, three hydrogen atoms connected to a carbon atom, and then you can move it around and then decarbonize the gas and have

the hydrogen so it can be a carrier. Those are the sort of things that could really make a difference later in the decade, some creative solutions, and I think we're going to continue to very much watch this space

on those technologies. So right now, the energy industry is going through a great deal of change, and I want to know from your standpoint, you know, what are some of the lessons that you've learned both during your time as the CEO and more importantly also working with the other senior executives that you work with through the O g C I about the best way to lead through change and really navigate what would be considered bumpy waters. Well, this is bumpy waters in the energy industry the whole

time I would have been in the industry. Usually there's a cycle up and down. When the upstreams up, the downstream is down and vice versa. This time everything is down. Demand is down across the world and everything. It's not just oil and gas, it's everything, you know, hospitality, industries, flying, many many manufacturing. It is a tough, tough economy. I think as a leader of those, you have to be

very flexible. You have to have patience and perseverance. That's definitely got to be a hallmark of what's happening now.

And uh, I always say nothing great happens without enthusiasm, So leaders have to be enthusiastic, and people right now need to be energized because these it's really hard, and leadership through the camera, like what we're doing, is sort of an unusual way to lead, and you know, you sort of lose that close human touch you had when you could travel and talk to many people and having optimism about the energy transitions, changing your portfolios, working with

investors in a different way. It requires a different set of leadership skills, but I think that one of patients perseverance and optimism is what will get companies through. And I can tell you the twelve CEOs I deal with on this, they're all working very hard at This makes me optimistic. I'm gonna say this conversation has made me optimistic as well. Well. Thank you very much for your time and for your insights today, Bob. We really appreciate

having you here. Okay, thanks Dana, thank you all very much. Today's episode of Switched On was edited by Rex Warner of Great Stoak Media BLOOMBERGINI at a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor it should it be construed as investment advice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg any should not be considered as information sufficient upon

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