HOUSTON—Recognizing the oil and gas industry’s need to respond to climate change and emissions, Statoil CEO Eldar Sætre said the company plans to allocate about 15% to 20% of its capex to renewables by 2030.

That is, if the projects are attractive.

The company, which explores, develops and produces oil and gas, is among the world’s leaders in offshore wind energy and carbon capture and storage. Speaking to a crowd gathered on opening day of CERAWeek by IHS Markit, Sætre said renewable energy costs are falling amid rapid technology innovation. The company believes renewables, which is the fastest growing source of new power generation capacity, will become cost-competitive without subsidies, Sætre said.

“We all know that oil and gas will continue to be a significant mix of the energy mix for decades to come; however, we have to respond more forcibly to the challenges of climate change, reducing CO2 and methane emissions,” he said, noting this will come with a cost but added companies who address such challenges will have a competitive advantage.

Sætre was joined on stage by Petrobras CEO Pedro Parente. The two took part in a discussion, moderated by IHS Markit Vice Chairman Daniel Yergin, on leadership. Each has served in their CEO roles for less than three years and, like many executives, both have faced challenges.

Yergin pointed out how Parente, who was appointed CEO of Petrobras in May 2016, was charged with the “urgent task of restoring confidence in the company and repairing its finances after being forced to write off billions of dollars,” the result of fallout from a corruption scandal uncovered by an investigation called Operation Car Wash.

Parente stressed that the company and most of its employees were “victims of this corruption scheme, not an agent, no benefit whatsoever,” only huge financial losses. Since the beginning of 2015, the situation has changed for Petrobras, which has worked to reduce its debt by carrying out a more than $15 billion divestment program.

“The fact that our company moved in the newspapers from the scandal page to the business page is very good, but it’s important to stress that this is just the beginning of a long work,” he said. “We appreciate the recognition but also are humbled by the responsibility and the challenges that are ahead of us. We will recover credibility as we deliver the results that we promise. That is pretty much what we are doing now.”

These challenges came along with the added obstacles of coping with a recession, fiscal imbalances and reforms, including freeing itself from requirements to serve as operator of all of the country’s presalt acreage, and then, there was the downturn.

In this regard, Sætre and Parente faced similar challenges as major oil and gas players with global assets both onshore and offshore.

Sætre became head of Statoil in mid-October 2014, just before the oil price crash changed life for the oil industry. At the time, Sætre remembered the price for a barrel of oil being $90, then the price collapsed—serving as another reminder that the industry is cyclical, he said. Although the last few years have been challenging, he recalled the saying: “You should never ever waste a good crisis.”

Statoil has reset the cost base, reworking solutions and increasing efficiency from reservoirs to the market, he said.

Breakeven costs for Statoil’s so-called next-generation portfolio—which includes projects such as the North Sea’s Johan Sverdrup and Oseberg Vestflanken, Johan Castberg in the Barents Sea, Peregrino II offshore Brazil and Trestakk in the Norwegian Sea with anticipated startups by 2022—from more than $70/bbl to less than $30/bbl.

“Turns out we are capable of both thinking and acting low-cost when we have to. However, to meet the ultimate test of our ability to learn lies not in the crisis itself but in the recovery. Now is not the time to relax and repeat our mistakes from the past. Now is the time to fundamentally change how we run this industry.”

Ways to accomplish this include:

  • Learning from peers;
  • Introducing lean manufacturing methodologies; and
  • Embracing simplification, standardization and industrialization, he said.

The CERAWeek stage was not the first time the two companies have come together. Petrobras sold a 66% stake in the Carcara presalt oil discovery in the Santos Basin, to Statoil in a $2.5 billion deal in 2016. The deal helped Petrobras move closer to its year-end 2016 goal of selling more than $15 billion of assets. Later that year, the two agreed to work together to stop falling production at aging offshore wells.

Velda Addison can be reached at vaddison@hartenergy.com or via Twitter @VeldaAddison.