Wednesday, January 8, 2025

Oil and gas firms face mounting financing challenges amid rising environmental concerns

Reading Time: 2 minutes
Julian Isaac

Journalist

Mahinda Arkyasa

Editor

Interview

Concerns about the environmental impact of fossil fuels continues grow, oil and gas companies are encountering increasing difficulties in securing financing for their projects. Executives in the oil and gas industry have emphasized the need for these firms to demonstrate a more environmentally friendly energy agenda.

Alwyn Bowden, CEO of Pengerang Energy Complex Malaysia, acknowledged that even though the oil and gas sector remains profitable, obtaining funding has become more challenging. “From the perspective of many lenders, including the word ‘refinery’ in your title means you won’t get financing,” Bowden stated during the Asian Downstream Summit in Singapore.

With the mounting global threat of climate change and the world’s efforts to move toward net-zero emissions, Bowden’s comments underscore the industry’s growing struggle to secure funding.

Despite global crude oil demand reaching all-time highs this year, lenders have become more cautious about offering financial support. This situation has strained the global refining system, leading to increased bottlenecks and fluctuating prices.

The mismatch between sustainable oil and gas demand and the reluctance to invest in capacity or maintain existing facilities has fueled global tensions in recent years. When fuel prices surged last year, senior Saudi Arabian oil officials blamed refining crises rather than crude oil shortages.

“Now refinery owners need to show that their businesses are in the process of transitioning toward net-zero emissions targets,” Bowden emphasized.

“For upcoming refineries, these efforts involve plans to use factory waste products as fuel and deliver electricity to several operations,” Bowden added.

Maria Katryn, Senior Financing Manager at PT Kilang Pertamina Internasional, noted that Pertamina has been able to secure funding by pursuing environmentally related projects, even though it has not completely succeeded in reducing emissions.

“Banks have imposed more restrictions on oil and gas financing, expecting the world to reduce its reliance on oil and gas,” said Roger Charles, Executive Director of Sustainability at DBS Bank Ltd. “A realistic narrative for energy transition plans is key to accessing funding,” he added.

However, launching a sustainable business also comes with its own set of challenges. “There are many examples of greenwashing, where people—due to various pressures—are forced to do something they cannot achieve,” said Mayank Vishnoi, Chief Financial Officer of ChemOne Group.

Julian Isaac

Journalist

Mahinda Arkyasa

Editor

 

Interview

SUBSCRIBE NOW
We will provide you with an invoice for your reimbursable expenses.

Free

New to Indonesian market? Read our free articles before subscribing to the premium plan. If you already run your business in Indonesia, make sure to subscribe to the premium subscription so you won’t miss any intelligence & business opportunities.

Premium

$550 USD/Year

or

$45 USD/Month

Cancelation: you can cancel your subscription at any time, by sending us an email inquiry@ibp-media.com

Add keywords to your market watch and receive notification:
Schedule a free consultation with us:

We’ll contact you for confirmation.

FURTHER READING

Minister of Housing and Settlement Areas, Maruarar Sirait, says that the government has built 40 thousand houses as part of the program to build 3 million houses per year as of Tuesday, January 7, 2025.
Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, met with top executives of State energy company PT Pertamina, requesting the Balikpapan Refinery Development Master Plan (RDMP) project to be operational in July 2025.
The Indonesian Internet Service Providers Association (APJII) and Bersama Digital Data Center (BDDC) officially launched the Second Indonesia Internet Exchange Jakarta (IIX-JK2) at the newest data center facility, JST1 (Jakarta-South-East-1) in East Jakarta.
PT Berkah Usaha Muamalah, a business unit of the Nahdlatul Ulama (NU) Muslim organization established to manage 25-26,000 hectares (ha) of mining concession in East Kalimantan, is currently progressing toward exploration permit.
PT Pertamina Hulu Rokan (PHR) through the drilling of the Rotan River Downloack-1 exploration well in the PHE Jambi Merang working area (WK) in South Sumatra found oil and gas resources from the Baturaja Formation Limestone.
The Smelter Grade Alumina Refinery (SGAR) project, operated by PT Borneo Alumina Indonesia (BAI) as a joint venture between PT Indonesia Asahan Aluminium (Inalum) and PT Aneka Tambang (Antam), is projected to give economic benefits for Mempawah region,  West Kalimantan.