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Commodity trader Vitol, best known for its crude oil and
petroleum products activity, added to its footprint in electric
transportation in the past few days. The company has growing
investments elsewhere in the energy transition too, including in
wind, solar, renewable natural gas, and hydrogen.
The Geneva, Switzerland-headquartered Vitol and Chinese electric
vehicle (EV), rechargeable battery, and energy storage system
manufacturer BYD said 22 September they had formed a partnership to provide
electric fleet mobility in various unnamed markets.
The companies are promising to offer municipal, corporate, and
other fleet operators "a comprehensive solution including [EVs],
charging infrastructure and depot design."
Vitol and BYD have committed an initial $250 million to the
initiative. "Fleet owners are looking to minimize emissions and our
proposition enables them to do so with minimal capital outlay and
outsourced operational risk," said Vitol Head of Renewables Andrew
de Pass.
The partners intend to grow their EV fleet "tenfold in the
coming years," de Pass said.
When announcing the partnership, Vitol said it was also in the
process of deploying more than 300 electric buses in Bogota,
Colombia, and "is seeking additional opportunities in South America
and further afield."
The BYD deal "is the strongest indication yet that Vitol is
seeking exposure to all forms of low-carbon transportation, having
already invested in projects in sustainable aviation and shipping
fuels," IHS Markit Associate Director Christopher Elsner said.
"The deal with BYD marks a dramatic escalation in capital
commitment from its current EV portfolio," he added.
Bunkering
In Singapore, meanwhile, Vitol's bunker operations company,
V-Bunkers, placed an order to build two
electric-hybrid bunker tankers. Bunker tankers provide fuel to
maritime vessels before voyages transporting cargo across the
globe.
V-Bunkers intends to deploy the two bunker tankers for harbor
operations in Singapore, which is the world's busiest bunkering
location. Delivery of the first of the two bunker tankers is
expected in the second half of 2022, Vitol said. The company said
its bunker tankers would be the first of their kind deployed in
Singapore.
The bunkering announcement is consistent with previous energy
transition investments in shipping, including the launch of carbon
offsets for marine customers, said IHS Markit's Elsner.
The fuel provided by bunker tankers to ships has been undergoing
its own transformation in recent years.
Starting 1 January 2020, the global upper limit on the sulfur
content of ships' fuel oil was reduced to 0.50% from 3.50% for
vessels operating outside certain designated Emission Control
Areas. In those areas, though, the limit was already 0.10%.
And tougher regulations may be on the way, especially in
Europe.
Shipping companies operating in the EU would need to start
buying a meaningful level of emissions allowances for the first
time under the proposed "Fit for 55" legislation.
Shipping operators would be required to obtain EU emissions trading
system allowances for a portion of their emissions for intra-EU
voyages starting in 2023, but they would ultimately need to obtain
them for all emissions after a four-year phase-in period.
A major European shipping trade body is among those lobbying against the EU's
proposed Paris Agreement-aligned net-zero pathway.
The changes hold the potential for a speedier switch to
hydrogen, biofuels, ammonia, methanol and perhaps LNG as the fuel
for vessels instead of fuel oil.
In 2020, Vitol traded 7 million barrels of crude oil and refined
products traded each day. The company calls itself the world's
largest independent trader of energy, trading more than 1,000 TWh
of power, 838 TWh of natural gas, 10 million metric tons (mt) of
LNG, and 106 million mt of carbon in 2020, according to Vitol
documents.
Some 47% of the company's sales in 2020 were crude and at least
40% were petroleum products including distillates, gasoline, and
fuel oil.
However, the company noted in its 2020 results statement in April
that public transport is "likely to be electrified in the near
future" and so Vitol is investing in EV fleets such as municipal
buses, corporate fleets and taxis, in developed and emerging
markets.
Vitol said it anticipates a shift in energy demand away from
liquid hydrocarbons towards power, and, as a result, its renewable
power investments are growing. "To date we have committed over $1
billion of new capital to identified projects in this sector," it
said.
"The energy transition requires our business to change. We
continue to believe that demand for oil will not peak for another
decade, but nonetheless we must position our business for a lower
emissions world," it added.
The company owns a 240-MW wind farm in Illinois and has invested
in opportunities in the sector in Europe, including in Ukraine. It
also has solar, LPG, renewable natural gas, and biofuels
interests.
In addition, the company owns the Immingham natural gas-fired
power plant on the east coast of England that is part of carbon
capture and storage efforts in the Humber region.
Developing countries, where Vitol already has a substantial
footprint, are also in the company's energy transition sights.
In August, Sudan's minister of energy and oil, Jaden Ali Obaid,
met with Vitol to discuss renewable energy
investments in the country and expanded petroleum product
deliveries, according to Suna, the state-owned news service. Vitol
wants to build 100-200 MW of solar capacity in Sudan, Suna said.
Vitol is the largest supplier of imported diesel in Sudan.
And in Morocco, Vitol is to manage the HEVO project's offtake of
green ammonia. HEVO is the country's largest green hydrogen and
green ammonia project to date. In addition to the green ammonia,
the $850-million facility is expected to produce up to 31,000
mt/year of green hydrogen.
Also in the green hydrogen space, Vitol in April acquired a 10% stake in Gen2
Energy. The Norwegian project developer will use hydropower in its
homeland to produce green hydrogen. The company's first site in
northern Norway, which is scheduled to be online by December 2023,
will have an electrolysis capacity of at least 80 MW and a hydrogen
output of 11,700 mt/year. A facility with a 300-MW capacity in the
southwest of Norway is on the drawing board.
Rivals
Some of Vitol's commodity trading rivals are heading down a
similar path as entrepreneurs sensing the opportunities in the
energy transition.
Mercuria, which is also based in Geneva, said in March that 50%
of its new investments over the next five years will involve the
energy transition.
The trader made the commitment as it announced an investment of
undisclosed size in The Mobility House, which Mercuria said
integrates EVs "intelligently" into the energy system.
Then, on 2 September, Mercuria acquired a 20% stake in New
Zealand's largest EV charging network, ChargeNet, for an
undisclosed figure. Steve West, ChargeNet's CEO, said in a
statement announcing the deal that Mercuria's investment would
provide it with the capital required to "significantly accelerate
its growth strategy."
Another of Vitol's commodity trading rivals, Trafigura, is
focusing on solar and hydrogen in its energy transition investments
so far.
Trafigura's Nala Renewables joint venture aims to develop 2 GW of solar,
wind and power storage projects globally. The foundation stone of
the plan is 250 MW of Trafigura Group renewable energy projects
currently in the pipeline. Trafigura also owns part of renewable
energy developer PASH Global.
In the hydrogen sector, Trafigura has an equity stake in
start-up Hy2gen. The German-based company brings together
specialists with experience of developing, building, and operating
plants for the production of green hydrogen and hydrogen-based
e-fuels, according to Trafigura.
Trafigura invested in H2 Energy, which is working on use of
hydrogen in heavy duty transportation. Trafigura also invested in
in OneH2, a US provider of hydrogen fuel supply and logistics
solutions.
