“Concern for the environment and sustainability will be preconditions for participation, in the same way safety already is,” the banker maintains.
He usually has a view over the whole of Oslo from his 17th-storey office in the city centre. But mist hangs over the capital today, and its periphery is difficult to distinguish.
In many respects, this external outlook serves to reflect the way Kvilekval views the future – there are many grey areas.
“It can be difficult to manoeuvre in the many scenarios,” he observes.
“Things are constantly changing, and complexity increases year by year.”
While finding it hard to predict, the man with global responsibility for oil and gas at DNB lists qualities he is certain companies must possess to succeed in the time to come.
“They must take sustainability seriously. They must analyse and understand how the world is developing, and position themselves accordingly. And they must create trust.
“That trust must extend out to a wide group, to shareholders, to ordinary people, and not least to the younger generation which is due to enter the labour market.”
No small job, in other words. But Kvilekval believes that preconditions in Norway are the very best for a great many companies to manage exactly this.
Checking out a changing industry
In a series of articles we will provide insights into some of the demands on and expectations for Norway’s largest and most profitable industry. These signals come f rom different quarters – politicians, climate activists, capital managers and employees.
With big business on board: The environmental challenges cannot be overcome by activism alone, says Nina Jensen. World-class expertise in the petroleum sector must also be utilised.
He joined DNB from the Ministry of Petroleum and Energy in 2001. Over the 20 years since then, the bank’s social mission has been constantly changing.
“As the largest banking and financial institution in Norway, we have a duty to work strategically and dynamically with that mission,” he explains.
For him, this is about trying to keep abreast of developments. In recent years, sustainability has become an integrated part of all business activities – which poses several major dilemmas.
“One example is provided by the petroleum sector, where a big need is seen to cut greenhouse gas emissions and change the energy system,” he notes.
Kvilekval lists several events in 2021 which have illustrated the seriousness of climate change, including the International Energy Agency (IEA) roadmap for global net zero emissions by 2050.
Others are the new report from the UN’s intergovernmental panel on climate change (IPCC), described by secretary general António Guterres as “code red for humanity”, and the climate summit in Glasgow.
Net zero by 2050. The IEA’s roadmap for global zero emissions at mid-century. This report shows that the goal is attainable, but calls for very ambitious action – including a total restructuring of the world’s energy system.
“At the same time as all this, we see a big world need for energy,” Kvilekval says. Globally, 850 million people have no access to electricity.
Pressure on the power system is so great in many places, such as China, India and Lebanon, that the grid collapses from time to time. And UK gas prices increased sixfold this autumn.
“In other words, we see a large and growing demand for secure energy supplies around the world as well as a big need for transition. That’s one of the greatest dilemmas of our time.”
He believes that much of the problem derives from underinvestment in the energy sector over a number of years, and says it will be important to have several ideas in one’s head simultaneously.
“DNB’s ambition is that our finance and investment business will cause net zero emissions by 2050, and it’s important for us to be involved in financing renewable energy.
“On the other hand, this is also a matter of not shutting out industries – as some banks have done in the case of oil and gas companies.”
The question then is whether that will be possible. After painting such a serious picture of the world’s climate status, is continued investment in petroleum acceptable.
“For our part, this is about conducting a good conversation with the companies,” Kvilekval explains.
“It’ll be important, for example, that oil firms also invest in renewables. We can then be a partner.
“In circumstances where demand for oil and gas is record-high, it suits us well to be able to influence and support our customers so that they produce as sustainably as possible.”
Many different forecasts exist about the profitability of new energy forms. The question which then arises for a banker is what ranks higher – morals or profits?
“These two considerations don’t necessarily conflict,” responds Kvilekval. He compares the focus on sustainability with safety requirements on the NCS.
“Tough standards for this were set fairly early on. Safety became a prerequisite, and still is. You then naturally have to ensure profitable operation. But it must be clear that nobody will accept anything which is less safe.”
“We in Norway are incredibly well placed to succeed with the transition,” says Espen Kvilekval in DNB. “We have well-developed safety standards, a good regulatory regime, massive technological expertise, adaptability and a large capital base.”
He believes concern for the environment and sustainability will be preconditions for pursuing offshore activities, just as safety already is.
“Virtually all the companies are well aware of this. Sustainability requirements aren’t controversial – rather the opposite.”
From his perspective, perched high above Oslo, Kvilekval sees big opportunities in the energy transition now under way.
“A huge amount is happening in the energy field today. We are hearing a great deal from companies which want to create something new and to be a driving force for change.”
In his view, a trend can be seen in Norwegian business today where people are looking to the future and focusing on the opportunities far more than they did a few years ago. Attention then was more on preserving what already existed.
Kvilekval points out that, historically, the world has seen little energy transition but rather energy addition. New forms have emerged alongside existing ones and absorbed demand growth.
“I believe most in diversity,” he says. “We’ll need many different forms of energy for a long time to come. But things must now be phased out – starting with coal.
“And that needs to be done intelligently. We see many users dropping coal, and a number nuclear power, without alternatives in place. So electricity and gas prices have shot up.”
Kvilekval makes it clear that the expertise found in the oil and gas sector must play a leading role, and that this must be given political backing.
“A great many of the new commitments are on the starting blocks, and the risk is great. So we need the state to provide good operating parameters.”
“In many ways, the world has never been a better place to live in,” Kvilekval says. “We must bear that in mind when talking about prospects which frighten us.
“The years to come will be demanding, but we in Norway are incredibly well placed to succeed with the transition.
“We have well-developed safety standards, a good regulatory regime, massive technological expertise, adaptability and a large capital base.
“Few counties are so fortunate. We’re lucky, and ready for the restructuring.”
This article has been taken from our Dialogue journal, which aims to encourage debate on some of the most relevant issues and challenges faced by the industry in the safety area.