Diversifying suppliers is, and will be, key for the future of energy transition; specialists on the Offshore Technologies Conference (OTC) discussed this Monday; stressing that without a robust and diverse supply chain, important renewable projects or transitioning projects for big companies, simply would not come to completion.
Firstly, during the panel, “Shaping a low carbon future with supplier diversity”, executives from BP, and Shell, discussed how the pandemic has changed the landscape for energy; as it has accelerated the need for diversity as it has posed some challenges, like scarcity.
Secondly, the climate change emergency has also weighed upon this factor, pushing companies to engage in low carbon projects; and even net zero targets. “As net zero targets increase and become more relevant; also, the need for a robust and diverse supply chain”; said Nastassja Hagan, Vice President of Supply Low Carbon Energy and Finance at bp.
She also remarked. “Customers are now demanding more from companies; they no longer just want you to deliver a certain energy product; but they also want to know where does this particular product comes from, and how is it affecting the planet.”
Consequently, for a company that delivers energy solutions; such as, for example, an oil company such as bp, diversifying its suppliers is vital for better development of products; for example, low carbon fuels. Hagan said during the panel that a diversified supply chain is key to meet those new demands from the market.
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Diversifying suppliers also has an ESG component
Thirdly, in such regard, Viet Van, Vice President of Supply Chain strategy at Shell, remarked. “During these past 18 months, the demand for transparency has been great; people wanna know where does a product comes from. There’s also a deep need for innovation, and for new solutions. How does a company provide innovative products and solutions to advance transition? By expanding and strengthening its supply chain.”
Moreover, the executive also remarked the recent court cases, back in May, in which The Hauge ruled against Shell, for it to accelerate its net zero strategy. “To tackle that challenge, Shell will precisely expand and diversify its supply chain. That will give us an expanded footprint, and better chances to have greater returns of investment.”
Furthermore, Viet Van talked about a case of success, with a Mexican supplier; “a small company, which is a vessel operator for deep-sea oil production; when our supplier knew about our strategy to go net zero, it raised its hand and proposed innovations to tackle emissions on the vessel. Suddenly, the customer turned into a supplier of new solutions. Such advancement in supply chain also expand our footprint.”
Finally, as hydrocarbons and oil would stay for a while in the global energy mix, Johnathan Lee, Business Development Manager for bp, said that carbon offsets became another form of diversifying supply chains. “Carbon offsets are not always hailed as a solution. However, carbon offsets have really a sustainability component that gives us the chance to finance and deliver new solutions, while we achieve the transition.”
In conclusion, panelists stressed the fact, that, while companies transition and they get to new territories with new energy projects (such as carbon capture or wind) they enter to new geographies, new territories; places where supply chains do not necessarily exist. Consequently, building a supply chain in such regions also helps to generate local jobs, and solutions for energy and environmental justice.
