Status Update

Nov 17, 2020

Slides

Good afternoon. It's my pleasure to wish you welcome to this year's launch of Equinor's Energy Perspectives. Today, we present the 10th edition of Energy Perspectives. We're doing it in unprecedented times and therefore also in an unusual format. For years, we have been in a situation where the impact of climate change becomes more visible and the need for action ever more imminent. On top, we are now in the 2nd wave unfolding pandemic with further major consequences for people, business and politics, which again creates uncertainty and volatility in the energy markets. My name is Hedi Daryalrum. I'm heading up Corporate Communication in Equinor And I have the pleasure of being your host through the next hour. Today's program starts with our Chief Economist, Eirik Reines presenting this year's version of Energy Perspectives that was made public this morning. Following Eirik, we will be joined by Executive Vice President for the Marketing and Processing area in Equinor, Irene Romanov. Irene will speak to how analysis like the energy perspectives is used as part of informing and shaping Equinor's strategy. Presentations, we will have a dialogue session. For that part, you have the opportunity to ask questions to Eirika and Irene via Slido. Further, we also have a poll in which we would love to get your answers to 3 questions. Underneath the video stream you're now watching, you'll find both the Q and A and poll. You can also visit slido.com and enter the code EP2020 as shown on the screen now. I encourage you to submit your questions and respond to the poll during Eirik's and Irene's presentations. But to kick it all off, let's hear from Equinor's new CEO, Anders Ope Dahl, sharing his perspectives 2 weeks into his tenure at the top of Equinor. 2020 has been a year of unprecedented uncertainty in the energy industry. While the humanitarian costs of the COVID-nineteen pandemic are still being counted, the world is suffering a global economic downturn and an increase in geopolitical uncertainty. The energy market turmoil we have seen this year far outweighs anything else I have experienced through my career in Ecuador. The pandemic is still affecting societies and markets. Uncertainty is high and no one can predict what the short and long term effects will be. There are many important questions with no clear answer at present. What effect will lower oil and gas prices have on supply? How will setbacks in the global trade affect demand? What impact will the pandemic have on the energy transition? Attempting to answer these questions makes scenario more important. Technology and innovation at scale to further optimize our oil and gas portfolio, accelerate profitable renewable energy projects and increase our effort to develop new low carbon solutions. We are transitioning towards becoming a broad energy company. Our success rests on our people, managing risk and staying competitive in a continuously changing business and policy environment. Energy Perspectives provides me and my colleagues with important insight that help us make sound decisions. I hope you will enjoy this 10th edition of the Energy Perspectives Report. Thank you, Anders. I'm sure we will enjoy it. And then time has come to call up Stavanger and our Chief Economist, Eirik Varnes. Hello, Eirik. Great to have you with us. Hello, Reinhard. Great to be with you digitally from Samana. Yeah. Next time there will be different. But I think we should go straight to it. And let's get the report that was launched this morning and hear your presentation. So the floor is yours, Eirik. Thank you, Gero. It's good to be back and present Energy Perspectives. Good afternoon, Europe and Africa, and good morning, America, and good evening, Asia. I'm proud to welcome you to the launch of the 10th edition of the Energy Perspectives report, our long term energy and macro outlook. This year's launch is special in many ways, primarily due to COVID. But I hope it will be well received and that it contributes to good discussions as normal also in the new normal. Since we presented our first Energy Perspectives report back in 2011, we have seen enormous changes in energy markets, just a few of which are listed here. World energy demand has grown by some 11%, while the economy is almost 30% larger. The shale revolution supported by ever increasing oil and gas demand has shaken both oil and gas markets. Ever cheaper renewable electricity signals the start of the energy transition. And CO2 emissions have unfortunately continued to grow despite massive attention on the issue and the need for dramatic changes. Back in 2011, we only made one forecast. And surprisingly, given all these changes, the forecast was not too bad, with a few exceptions. Fortunately, we were much too bullish on the development in coal demand, which peaked in 2013 and not in 2030 as we predicted. We missed on oil demand by a margin on the downside. We were too optimistic on electrification and energy efficiency. But then we got it right this year, but for the wrong reasons, namely COVID. However, and probably a surprise to many, including us, we did very well in predicting the growth in wind and solar electricity generation. And of course, 2020 has seen the impacts of the COVID pandemic, a humanitarian and economic disaster that will affect all our lives for years to come. In addition to the humanitarian tolls, its impact has been profound in energy markets with crashing oil demand and even negative prices. These kind of unprecedented events are difficult to put into any forecast or scenario. Here you can see the global fuel mix through the previous energy transitions. For most of human history, biomass and mainly wood has been the main source of energy. And this all changed with the Industrial Revolution. And in the late 19th century, we transformed into the coal age. Then in the mid-twenty century, the most recent energy transition to the oil age happened. And we've also seen rapid growth in natural gas as well as in nuclear and hydro playing important roles. And we can, if we look hard, see the result of the very rapid growth in renewables over the last decade. But were these truly energy transitions or were they energy additions? When we look at the same data in absolute terms, we see that there's far more coal used today than any time during the cold age. Even biomass is still growing as a fuel source. The only thing that has been consistent is that the world demands more and more energy, and we just find new ways to meet that demand. How much longer can energy demand keep growing? How much longer can we depend on nonrenewable and CO2 emitting resources for that energy demand. And then let us look at the recent history in a bit more detail. The story of the last 30 years has been all about the rapid growth of wind and solar. Look at the left chart. However, in absolute terms, they still make up a very small share of the fuel mix and all fuels have grown in absolute terms. We still live in a heavily fossil fuel dominated economy, and demand continued to grow until COVID hit. What is driving that demand? Looking across regions, we can see that the industrialized economies in Europe, North America and Asia Pacific have had relatively stable energy demand. And within that, some countries even with declining demand. Almost all the growth comes from the emerging economies, with a clear standout being China's incredible growth since 2000, becoming the world's largest source of energy demand around 2010. Split by sector in the right chart, manufacturing and transport have seen the most rapid growth as economic development brings demand for goods, car ownership and domestic and international travel. But this rapid development and increased consumption comes with a price in the form of CO2 emissions. CO2 emissions along with other greenhouse gases have continued to rise. To reach a sustainable path, these emissions must eventually be net 0, so this line must go down to almost 0. After decades of global efforts, the only things that have resulted in significant emission reductions are the global financial crisis more than a decade ago and the COVID pandemic. It was a reduction in consumption and energy demand that caused this, not changes in the fuel mix, not energy efficiency, nor any other energy transition trend. And when we break these emissions down by region again, we see that emissions have been flat, not surprisingly, in the industrialized countries and grown significantly in the emerging economies and particularly in China. And at the moment, just two regions, North America and China combined make up 47% of the global emissions, almost half. So that's the current situation. Where do we go from here? What are the long term trends in the energy markets? When we look at different drivers such as growth, energy efficiency, technology, climate policies, market regulations and geopolitics, we see many signposts for where the world might be heading, but they're pointing in different directions. How can we make sense of them all? And how is the development going forward affected by the disastrous COVID pandemic? We're still in the middle of the COVID pandemic and the line of sight to its end is not clear. Even if news about a possible vaccine being around the corner or actually 2 possible vaccines were significant positive surprises last week and this week. Many outcomes are possible as are the long term impact of the virus and its impact on consumer behavior and energy demand. We've chosen to establish what we think is a likely path in terms of GDP growth and energy demand development over the next couple of years. You can see that in the right chart. Now these are based on assumptions on the implementation of a vaccine, its impact, policy measures like continued lockdowns and not continued lockdowns and the impact of stimulus packages to the global economy before we see possible different long term trajectories for the energy sector emerging. With all the uncertainty, we need scenarios as it was said in the video in the beginning of this presentation. We need scenarios to describe possible development paths, stories about the future. And our scenarios are assumed to start diverging around 2022, 2023. As before, we have 3 scenarios in Energy Perspectives, 2 showing where the world could be heading depending on the strength of different drivers we observe today. In the reform scenario, economic growth is prioritized and driven by technological advancement in a setting of geopolitical cooperation and friendly competition. That's one possibility. Another one is rivalry, in which the current momentum towards unilateralism and isolationism continues with impacts on protectionism and reduced international trade and technology exchange. Or we could end up in a third alternative, a new scenario for this 10th edition. It's called rebalance. It points as a normative scenario to where the world needs to go, where we must go to achieve the targets in the Paris Agreement and progress towards delivering on the U. N. Sustainable Development Goals at the same time. Rebalance requires unprecedented changes in the global economy as well as international collaboration and technological progress. Why rebalance? We currently live in a very unbalanced world, where 15% of the world's population have almost twothree of the income and use more than onethree of energy. If the remaining 85% of the global population aspire to copy the economies and lifestyles of these countries of our countries, then there's no chance for a sustainable future. But how can we expect the people in the 85% to be happy with not having the kind of lives that those that us in the richest countries currently have? So a sustainable future requires a rebalanced world, therefore rebalance. The world must drastically change course if we are to reach the strategic target. We need to rebalance the global economy both between industrialized and emerging economies as well as internally in different regions and countries. Focus must turn to sustainable economic development in emerging economies and well-being reduced waste and less excess consumption in the industrialized economies. We need coordinated policies across the board in a setting of trust and cooperation to correct incentives and promote investments and change. And we need changes in behavior that move us in the right direction. And do not forget, if we are to reach the targeted emission reductions, we need all of these changes fast. So what do the 3 scenarios then deliver in terms of economic growth and CO2 emissions? The pendulum of geopolitics has recently swung towards the more populist and protectionist path. Continuing on this path takes us on the rivalry trajectory that we show in the chart now, where the world economy grows moderately at 1.8% per year along with CO2 emissions until they peak around 2,040. This is not a sustainable development, but it's possible. Or the pendulum could swing towards our reform scenario, characterized by less conflict and more cooperation in which economies are optimized for GDP growth and there are constructive market conditions. GDP growth here is 2.1% per year, so that we are almost twice as rich if you like. The global economy is twice as large as today by 2,050. In this world, CO2 emissions begin to decrease, but not nearly enough to stay below 2 degree warming, in spite of significant tightening of energy and climate policies in line with the national commitments in the Paris Agreement. Or the pendulum could swing further towards our rebalance scenario, a world where CO2 emissions reductions are on course for a well below 2 degree world. Here in the industrialized world, industrialized countries, we forego GDP growth and move towards a more balanced, stable and green economy, while the emerging economies start closing the income gap and embark on a sustainable path according to the U. N. Sustainable Development Goals. Overall GDP growth here is a little lower than any reform at 2% per year. And in order to deliver on the emission reductions in rebalance, look at the green line in the right chart. We need massive growth in carbon capture and storage, removing 2,000,000,000 tonnes of CO2 annually by 2,050. While rebalance delivers on the well below 2 degree target in the Paris Agreement, going to net 0 by 2,050 would require even more ambitious assumptions on CCS and Renewable Electricity in combination with hydrogen and also natural sinks and potentially sources of negative emissions to make room for the necessary gross emissions. Rebalance is a massive challenge and even more would be needed if global net 0 by 2,050 were to be realized. Let's examine rebalance a bit more in detail. A key difference between rebalance and reform is that the former contains significant convergence between rich and poor parts of the world in terms of energy use and income growth per capita. We illustrate this here showing how energy use goes down in the left chart and income growth slows down in the 3 richest regions at the top of these charts compared with reform, while the development in the 3 poorest regions is the opposite. We believe that any plausible and credible path to achieving Paris targets and the U. N. Sustainable Development Goals simultaneously must deliver on this convergence. What will the scenarios bring in terms of energy demand and mix? Well, they all contain energy transitions and significant fuel mix changes, but reform and rivalry entail growth in energy demand as well by 10% or 21% respectively. Only rebalance delivers on the need to reduce overall energy demand and move out of fossil fuels. So 15% reduction in overall energy demand, more than 50% reduction in fossil fuel demand by 2,050. And that is by design. That's what we have to do. Rebalance delivers the biggest increase in electricity generation, plus 80%. Renewables and Nuclear increased sufficiently fast to deliver not only on the increase in electricity demand, but also on the need to get fossil fuels out of the power generation mix as soon as possible. The largest changes take place in the transport sector, where both reform and in particular rebalance deliver much lower fuel demand and a massive increase in electrification. This is driven by changing transport patterns and transport modes as well as energy efficiency and electrification. What about hydrogen, you might ask, the big buzzword of 2020 in addition to COVID. Well, first, hydrogen is not an energy source, but an energy carrier that must be produced from something. That something could be hydrocarbons or electricity, but it requires energy and brings with it an energy efficiency penalty when produced and transformed back to heat or electricity. Secondly, hydrogen currently is not a commoditized energy product lacking a clear path to an upstream and midstream system of a scale that would significantly influence the end use energy mix. In addition to that of dedicated production capacity for refineries and ammonia plants. However, being CO2 emission free when used for heat, as a fuel or feedstock or for electricity production, hydrogen certainly holds potential as a widely used decarbonized alternative and especially in relation to net zero emission emissions. We will mature our thinking around hydrogen as an end use energy commodity, but thus far we've not modeled hydrogen specifically at a global level. Meanwhile, more electricity from renewables and more gas with CCS are good proxies for what could be the landscape of a net zero energy economy compared to our rebalance scenario. Nevertheless, we believe the primary usage of hydrogen will be in the hard to decarbonize sectors such as feedstock to chemical processes, heat and molecules in the industry and as shipping fuel. Taking a closer look at oil demand, we see why the COVID lockdowns were especially visible in terms of oil markets. More than half of oil demand comes from the transport sector. Out of this, threefour is road transport. Aviation, which was particularly hard hit by the COVID restrictions, only constitutes 7% of oil demand, around 7,000,000 barrels per day. The scenarios describe a very different and a very wide outcome space for oil demand ranging from 47,000,000 slightly below 50,000,000 barrels to more than 110,000,000 barrels per day. That's not a very precise forecast from a group of analysts, but they're all possible trajectories. Given the importance of transport in oil demand, delivering on a rebalanced scenario, therefore, depends on massive changes in the transport sector, as I just mentioned. As you can see in the chart to the right, oil demand declines in all other sectors as well with one exception, the petrochemical sector. In this sector, we see a moderate increase in demand for oil at Feedstock. Despite a significant despite of significant recycling efforts and very high focus on reducing plastic waste. Turning to natural gas. The story today is that of a versatile fuel serving multiple demand sectors in tough competition. The power and heat sector is the largest source of gas demand, 40%, the red area in the left chart. But in this sector, to the right, gas competes with a lot of other energy sources. If gas were to replace all the coal currently used in the power and heat sector, total gas demand would increase by some 80%, with power and heat then constituting 2 thirds of gas demand and CO2 emissions would be significantly reduced. However, unfortunately, the competition for gas in the power sector from new renewables is high, which is good. The outlook for gas in our three scenarios is also very different, but less so than in the case of oil. Demand continues to increase in all scenarios beyond 2,030 in rebalance until decarbonization of the power sector starts to bite into gas demand. The regional developments in rebalance are interesting, where there's a considerable reduction in gas demand in the industrialized countries, some of which have surplus gas like North America, while emerging economies and in particular China and India will experience growth in gas demand to 2,050 partly to facilitate the massive reduction in coal demand needed to deliver on emission reductions. So what do these trajectories entail for new oil and gas investments? The demand ranges are wide. But in all cases, if we were to stop all investments, supply from legacy reserves would decline every year, faster than the decline in rebalance, which is at the lower end of the blue and green ranges. In order to satisfy demand in all scenarios, therefore, there is a need for new investments to develop resources into reserves and potentially also to find new energy and carbon efficient reserves. Of course, the need for new investments would be much higher in reform and rivalry than in rebalance. The supply gap for oil in 2,050 in rebalance would be around 24,000,000 barrels per day or roughly 50% of the level of demand by then. The total supply gap for oil over the next 30 years in a rebalanced case amounts to some 260,000,000,000 barrels, which to put into perspective is more than OpEx has delivered over the last 20 years. For gas, the total supply gap, the white area in the right chart is 62,000,000,000,000 cubic meters, which is much more than North America, Russia and the Middle East combined have delivered over the last 30 years. So we not only need to deliver on the energy transition through massive investments and changes in behavior, we also have to continue to invest in oil and gas to satisfy demand. Turning back to the energy addition since the beginning of the last century from the coal age to the oil age. We conclude that a sustainable development in line with rebalance requires a massive energy transition for the first time in human history where energy demand starts to decline, while the new sources of energy replace the use of a lot of the old sources of energy. Also in reform, global energy demand ultimately peaks and goes into decline, but this and the fuel mix change that we have in that scenario is not sufficient to deliver on the Paris climate targets. In summary then, it is possible to deliver on a sustainable energy transition in line with the Paris targets and the U. N. Sustainable Development Goals. It's a unique challenge that most likely requires a fundamental change in policies across several dimensions to deliver a balanced outcome. The need for investments under conditions of uncertainty is large across the energy system, which again requires clear policies, the right framework conditions and benign cooperation. There is ample need for different actors to shape our energy future, and we must do it together. So we value your opinions and appreciate your input on how we might improve our efforts of describing possible long term future scenarios for the global energy sector, please do not hesitate to give us your feedback. And thank you for listening. And I turn this back to Oslo and Eurator. Thank you so far, Erik, and thank you for a great introduction packed with information as always. I'm sure your presentation has spurred a lot of curiosity in the audience. So please come forward with your questions by using Slido. Minutes. But now it's my pleasure to welcome our next speaker of the day, Eliane Rummerhoff, Executive Vice President Hi there, Reeder. How are you? I'm good. And it's good to have both you and Eirik with us here. Sorry, we can't be together, but we're looking forward to another opportunity. So let's hear your views around what has been discussed so far and the perspectives that this report gives. Please, Irene. Thank you, Neidar. And thank you, Erik, for a very interesting and engaging presentation, as always, I have to say. And good afternoon to all of you. I'm extremely pleased to be here today and I'm also excited that so many of you have chosen to join us virtually for this event. Energy Perspective is celebrating its 10th anniversary and a year of unprecedented change and uncertainty particularly for the Global Energy Business. Within the next few minutes, I will share with you why I believe the Energy Perspective Report is so important, not only for Equinor, but as a source of insights and facts and as a contribution to engagement and discussions throughout the wide range of shareholders. I will also elaborate on the following two questions. How should Equinor navigate within all this uncertainty? And how could and should Equinor use such an outlook to inform our strategy and vision going forward. So let's start with why I think Energy Perspective is such an important report for us. It is a unique product. It's developed in house by a highly competent market analysis team, which I'm sure now are eagerly waiting for me to finish up so we can get into the more exciting Q and A session. It is developed on a ground term and on arm's length basis. And I can assure you that no business decision makers like myself have been involved or have had the chance to influence this before the publication. The report is shared publicly and debated hopefully in a constructive manner to benefit both Equinor and the public and a whole range of other stakeholders. It does examine 3 different paths or scenarios as Eirik has talked about, shaped and emphasized by different drivers with different rates. There are all three scenarios possible and plausible futures and the perception of their probability varies, but the outcome space also varies significantly. There are quite a few technologies that are impacting the future of the global energy space. The most important ones, I would argue, are energy and climate policies cannot be underestimated. Technology, geopolitics, economic growth that Erik has talked a lot about and then also consumer preferences and behaviors. I would argue that no one can say for sure exactly how things will develop. But the chances of making better decisions, if informed by energy perspectives or similar analysis are uncontested. So then to how should Equinor navigate within all this uncertainty? Navigating uncertainty is not an exact science and we all have to find our own approach to it. In Equidor, we have for quite some time now developed ourselves into a broad energy company. One reason for that, it's exactly to handle the uncertainty we're experiencing. It's all about creating optionalities for a future that is extremely hard to predict. Another one is of course to take advantage of the opportunities that comes with the energy transition. I can tell you that we're experiencing every single day that the competence and skill set that we have developed over the last 5 decades is easily transferable and applicable also to new technologies and regions. As Anders said in the introductory video, our strategy is firm, always safe, high value, low carbon. But we are constantly looking for ways to improve our portfolio. We're optimizing our oil and gas assets. We are accelerating our renewable investments and projects and we are increasing our efforts to develop new low carbon solutions. We do this to make sure that we're not putting all our eggs in one basket and to maintain the ability to change course when needed. Towards the end of this presentation, I'd like to share with you how the scenarios in Energy Perspectives inform and influence our strategy. Over the past few years, we've seen tremendous changing in the patterns of where capital is rooted within the energy space. And there's no doubt the energy transition has started. But the massive changes that the global energy systems needs to go through to reach the desired climate targets cannot and must not be underestimated. There precisely be sure of the path of the transition and it will be a marathon rather than a sprint. So it is important that we make sure that decisions we're making today will have the intended long term effects. Success in most cases starts with clear targets and objectives. In this case, I would argue for nations, regions, companies and also individuals like you and me. Equinor has an extremely important role to play in the upcoming or ongoing, I should say, energy transition. And we want to contribute proactively to development aligned with the goals of Paris Agreement. We are already one of the most carbon efficient producers of oil and gas, 55% less emissions than the average. And we have a target to increase or decrease the intensity down to 8 kilos per barrel in 2025. We have recently forcefully, I would say, strengthened our long term ambitions and said that we will actually as a company be net 0 in 2,050 including the emissions from the use of our products, the so called Scope 3 emissions. We've also set an ambition to grow our renewables tenfold within 2026. So targets are important, but they have to be accompanied by actions. And in 2020, we sanctioned the 1st full scale carbon capture and storage project, capturing CO2 from industrial sources, the Northern Light project. We sanctioned the largest floating offshore wind park in the world called Hywindampen. In the U. K, we made significant progress on our hydrogen project called Humber Salt End and also of course important steps with respect to further develop the world's largest offshore wind park, Dogger Bank. As we see, Equinor's oil and gas production fall after 2,030. And also demand for our products will fall in that same period. We will and intend to develop a new foundation for growth in the world that is going through the largest energy transition ever. Achieving the ambitions of the Paris Agreement will require significant effort across society from policymakers to consumers, from individuals to companies to industrial associations. Energy Perspective is providing us with an understanding of the scope and range of such effort. And I would like to close my reflections by saying that we believe our broad set of climate ambitions and actions demonstrate that our strategy is consistent with the ambitions of the Paris Agreement. So thank you all for your attention. And over to you, Reeder. Thank you so much, Irene. You will soon be back for the dialogue session with Eirik, where we will take questions that you out there have asked through Slido. And there is a lot of interest out there. But before we go to the questions, let's have a look at the results of the poll that we introduced at the beginning of the program. The first question is, how likely do you think it is for the world to develop in a way consistent with the climate targets in the Paris agreement. So here 55% says unlikely, 31% likely and then a mix between very probably either 2. We'll get back to that questions. So let's look at the next one. Do you think the world has passed the point of peak oil demand? No, says 61%. Yes, says 39. Percent. And the final question we asked was this. Will you make lasting changes in your work habits and lifestyle because of COVID-nineteen? 68%, yes some 25% yes many and only 7% no. So we will not return to what we were used to. Let's have some reflections around to everyone who has responded. And I think we should start with a question regarding the likelihood of reaching the Paris agreement goals. I guess highly relevant to both of you, but could we have the results up on the screen so that we see it? I think, yes, there it is. So more people tend to say unlikely than likely. You said there is an opportunity to reach the goal of the Paris Agreement and not the majority is supporting that. But what's your thought around the response we've had here? [SPEAKER LARS CHRISTIAN BACHER:] No. I think it reflects the opinion of the listeners that achieving these targets is a massive challenge. That doesn't mean it's impossible. And it can still be plausible, but it reflects the massive challenges both in terms of achieving necessary development and delivering on sustainable development goals and at the same time making sure that we change the energy system sufficiently to avoid sufficient amounts of emissions to actually reach those targets. I took comfort in quite a few respondents also think it's likely. And that means that there is at least potential for each and every one of us to try and move the needle in the right direction, to call on politicians to put in place the right targets, to push us as an industry to also try and do our stuff. And even if we don't reach all the way, getting quite a bit further is also good. So and I think it's it looks like the reform case is what most of the responders think is more likely than the rebalance case. Thanks, Erik. And following up on that, Adrian, do you see signals out there that believes you think that it is likely that we will reach the targets of the Paris Agreement? I personally am much more optimistic now than I was only a few years ago. And a few points a few things I would point to. We're seeing no post COVID. A lot of governments coming out saying we're going to put in place green stimulus packages. Still remains to be seen. They're putting the targets out there, but they need to follow-up with actions. I think maybe the most important trend that I'm seeing is that we see capital starting to speak up. We see investors putting a lot of different scenarios, etcetera. And I think when Monique talks then a lot of people tend to line up. Another interesting and exciting development in is within consumer, I guess, behaviors and preferences. We see signs, I would say, more than weak signs that they will starting to develop these green marketplaces where actually people are paying a premium for products that are produced with the lower carbon emissions. We're seeing it happening within aluminum. We see it Cheltenbergoten. We have seen a little bit of that we produce off at Chelbaghorden. We have seen LNG cargoes being sold with a premium because they have lower CO2 emissions. So getting the consumers to act is also a very, very important signal and signpost I think. So you believe that low carbon can be a competitive edge in the markets that you just described? I'm convinced it will be in the future. Good. Thanks. Hey, Erik. From the report and kind of the massive material that now is accessible at equinor dotcom, so people can go in and look for more. But briefly from the report to this question, do you see any facts supporting or contradicting in a way? What is the main view of the people out there? No. I think it's clear that we see many, many signals of change that could speed up the energy transition and make it more likely that we reach these targets. The growth in electric vehicles, the growth in renewables, the signals that people are willing to pay a price and actually change their behavior, some of the developments on the hydrogen scene, the growth in batteries. So there are many of those that if they are allowed to grow sufficiently fast, it will increase the chance of making sure that we get the energy transition right. So we don't not only increase energy demand, but also shift out of fossil fuels. On the other hand, the climate for political cooperation, if you like, at the global scene is a clear indicator that this is going to be very, very difficult, because this is about acting together. This is about putting in place measures and stop talking about targets. We're long on targets and short on measures in global politics in this area. So we need politicians that have a sufficient mandate from their voters to take on some of these costs for the cost of the greater good, which is the global climate challenge in this case. And we see that in other challenges as well, global challenges. We know that we have to cooperate to eradicate poverty. We haven't been able to do it. And things are going in the wrong direction in many countries in that respect as well. So you can and that's what so that's the point here is that looking out there, there are many signals that go in different directions and you have to be an optimist in one dimension to make sure we deliver on the targets. And you have to hope that some of the signposts that go in the wrong direction move to the back seat. Both of you follow geopolitics closely and you touched upon it now. The recent result of the U. S. Presidential election could that change kind of your view as to the opportunity of getting the world politicians to work even more closely together. Irene? Well, I think our experience in the U. S, which I'm sure you're alluding to is that the guy on top is important, but not that important. We see that the different states have a lot of freedom with respect to setting their own climate targets. We're operating with our offshore wind business in Northeastern U. S. Lots of new targets have come out within Trump's period at the range. So and we're also seeing that companies are setting targets independent of who's leading or the politicians in the country. So it is important, of course, And I think the result, if finalized, I guess, will take us in the right direction, but it's not absolutely essential. It's what we have experienced over the last 4 years. Okay. Thank you. Let's move to the second question related to an old topic and have you had peak oil demand? And I guess we should have had it or we need to have it very soon to be able at all to reach the goals of the Paris Agreement. This is something that you have studied for years, Erik. What's your thought? Have you had peak oil demand? Well, in our in what we think is the most likely path out of the COVID pandemic, the answer to that is no. We will come back to the level of oil demand in 2019 around 2023. So the most likely path is no. But if we were to see rebalance coming a little bit sooner then the answer is yes. But most likely no because of the growth in energy demand, the growth in transport, the new car sales in emerging economies, we're not able to keep up sufficiently fast with the fast electrification that is going on, in particular in Norway, but in a few other countries as well. So that's the most likely response. Okay. Let's take the last question from the poll, which was about whether people would change lifestyle following COVID-nineteen. I'll pass that on to you, Irene. Do we have the results on the screen for everyone as well? We could get it up. Yes. Yes, so many, yes, many, total dominating. So I take it for granted, not only you personally, Irene, but that also Equinor is preparing for kind of a different corporate lifestyle when COVID-nineteen is not as dominating as it is today. What's going on within the company? Well, I think we've all had have been going through a crash course in Teams and building our digital capabilities at rapid speed over the COVID period. I think what we will see and what we are discussing We'll see less people commuting into an office. I think we will travel less, unfortunately. I do like travel, but it's good to be out there. But we will travel less and there are certainly a lot of advantages. We will use digital tools to work together with the offshore installations. I am responsible for a lot of the onshore plants. Tomorrow, we're having a HoloLens visit to Sjellbergotten again. So I'm looking forward to that. So that's part of, I guess, the new ways of working. So we will not go back to the same for sure. So I think I'm in the camp of we'll change somewhat, but not totally. Okay. Thanks. So then we have touched upon all the three questions from the poll and we'll move to Slido and the questions here. They go a little kind of all over the place. But now it's the viewers out there who is deciding the agenda and I'm sure that you can cover most of this. One aspect which also has huge interest for Equinor and for Norway, of course, since you see EU gas demand falling and producer behavior impacting gas prices, will you adjust your future production of gas? So I guess I'll take that to you then Irene. Well, we do believe that gas will be important in the EU fuel mix for a long time going forward. Right now, we're seeing a lot of substitution from coal to gas. We do think gas is going to be extremely important as a flexible backup source for the renewables. But if we are to get to net 0 within a reasonable time frame, we need to get rid of or we need to decarbonize hydrogen gas as well. And we are looking extensively into decarbonizing the gas and transforming it into hydrogen. Hydrogen is an emission free gas, be liquefied and it can be used for almost all the same purposes as we're using natural gas for today. So I believe gas has a future, but eventually will have to be decarbonized along with the rest of society. Good. Like we saw in the poll, it's obvious that it's a hard and tough journey to get to reach the climate targets of Paris. And there's a question, what are and I would add to that if there are any, what are the low hanging fruits in the energy transition? Building on electrified infrastructure in developing countries or investing CCUS in developed countries? Eirik? Well, I'm not sure that any of those are low hanging fruits. But the obvious low hanging fruits are the ones that we in Norway never got to because we passed them before we started talking about this. And that's to make sure that you have a renewable electricity system. And in the case of many countries where they have an electricity system, getting coal out of the mix and replacing that with gas first, then nuclear and then renewals or in another sequence is definitely the lowest hanging fruit. Then the electrification of parts of transport, which is also happening, but that takes longer. It's not as low hanging. And then of course, avoiding the mistakes of coal fired electricity in the countries which have fantastically growing electricity demand. So skipping coal, making sure that you have a renewable electricity system based on solar and wind where that is possible with a necessary backup is a much smarter route than going via the old fossil fuel changes. But building electricity infrastructure in large emerging economies with a lot of growth and a lot of poverty is difficult in and by itself, but it has to happen. I'm sure you'll comment on this also, Edi. And I'll add another question, which you mentioned nuclear energy. Eirik, what about nuclear energy for electricity production, CO2 free? I can maybe copy how Arvie answer on that one as well because I think it is a viable solution and it needs to be part of the energy mix. But as of today, it is considered too costly. It's significantly more costly per megawatt hour than both gas fired, coal fired and solar and wind projects. So that's the challenge. And then there's a lead time. The regulation around it and all the approvals needed means that takes typically 15 years to get to production. So it's a slow moving tool. What I wanted to talk a little bit about with respect to your previous questions because we there's so much focus on the low hanging fruits, which is solar and wind and electrical vehicles. But what people tend to forget is that that's only a tiny part of the energy system, the global energy system. And there are so many parts that are extremely hard to decarbonize. Take air traffic, for instance. No one envisions solar fueled their airplanes anytime soon. You've got lots of industries that are dependent on burning flames or high temperatures that you cannot achieve with electricity. You have industry that will emit CO2 independently of energy source such as cement production, steel production, etcetera. So we should not underestimate this massive transition decarbonize sectors than the low hanging fruits. Following up with question on sources of energy and that's around offshore wind, which is an area where Equinor is investing heavily. What are your thoughts on offshore wind development? What regions will lead development to 2,050? You touched upon the company ambitions in your reflections, Irene. So where is those gigawatts going to come from? Well, I think there are 2 regions that stand out well, 3 regions 2 regions that stand out and one emerging one. It's Northwest Europe, U. K. Leading the way, Germany, Netherlands following. We're seeing some emerging development also in the Baltic Sea. But then there is East Coast of the U. S. And next I would argue is Asia. We're seeing quite a bit of development in Taiwan. Japan is opening up. South Korea is an area where we actively pursue. But eventually, the world will run out of these shallow water areas. And we do believe that floating offshore wind, which we have a specific competitive edge within, will be important. And the way we see it, only maybe or 20% of the wind resources are in water depths applicable for bottom fixed offshore wind and 80% is reserved for floating. So I would look for floating opportunities as well. And then you can move to the East Coast no, West Coast of the U. S. And a lot of Ireland states and much of Asia that is not relevant for the bottom fixed as well. Supporting comments to this, Eirik? No. That's totally in line with the way I look at it as well. And a country like Japan, for instance, also needs floating wind in order to utilize that resource. So and we're going to run out of space on onshore wind in heavily populated countries as well. So any country with a coastline that needs wind electricity needs offshore wind at some point. And then of course in order to utilize that in a region like Europe, we also need the infrastructure development so that parts of the region which is does not have a mine can be connected to an international grid where we can efficiently then exchange solar electricity onshore wind offshore wind in a much larger system. Let's go take a question here, which often comes up around scenario planning and when you make your perspectives available Eirik. And that is how do the Equinor scenarios compare to those of BP, Exxon, IA or OPEC in terms of future oil demand? Where do you see similarities or differences? A lot of people are of course looking at all these various scenarios. Yeah. Generally, I guess, I mean, with the 3 very widely different scenarios than rivalry scenario, we our outcome space for oil and gas demand in particular and also for renewable electricity generally spans the outcome space of many other scenarios as well. The reform scenario that we have is very similar to the STEP scenario that IEA just presented. Our rebalance scenario in some respects is very similar to their sustainable development scenario and also to the rapid decline scenario of BP. Some others now have added on what do you need to do extra in terms of net 0. We have some sensitivities around that in our report, but we haven't put it into a fully fledged scenario yet because we need to model hydrogen. So generally speaking, we our scenarios are covering a very large outcome space. We have a lot of good dialogues with different actors. And of course, so we engage in discussions and none of us is going to get it perfectly right. And we all agree I think that there's no silver bullet in solving the challenge. We have to pursue all these different types of technologies and changes and policy changes across the board in order to try and move in the right direction. No silver bullets, but what we're looking for is the golden opportunities, isn't it? So we'll see who comes up. So massive opportunities to shape the future of energy here. Exactly. Two points. Two more questions is what we actually can do. One will go to Eirik, the second one to Irene. And please, crisp on this. Eirik, in the evaluation of the scenarios, how do you weight the scenarios with respect to the likelihood it will happen? Well, that's an exercise we don't do when we make scenarios, because they're both or they're all possible and plausible. If you take each one as a point estimate, they're not very we're So they're not very likely any of them when you look at the points. We think they're spanning out the possibility space. Okay. Let's move from there then to how scenarios is used for strategy. The last question to you Irene. Which of the 3 of of the 2,050 net zero target, we are actually aligned with the Paris Agreement. And also our strategy is aligned with that. So but the importance is that we need to be prepared for all scenarios and we need to have the ability to change course if needed. But I can clearly state that our strategy is now aligned with the rebalance and the Paris agreement. Thank you very much. Then we are actually more or less spot on the time that we had set off for this event. And let me say a big thank you to Irene and Eirik for participating from Sohangi. Thank you very much. Thank you. Thank you. And then thanks also to all of you participating in the poll and for asking questions. But foremost, thanks to all of you that have followed this event. As we have recorded it, we will make it available for replay at equinor.com as soon as possible. And I also encourage you to visit other interesting materials on the topics discussed in Energy in This year in a different format due to the pandemic, but still we will have Executive Director of the International Energy Agency, Fatih Birol joining us from Paris. And we will have Norway's Minister of Petroleum and Energy, Tim Ablij. And we will of course have Equinor's CEO, Anders Oppedahl. That's next Wednesday at 9 a. M. I hope to see you again then. For now, thank you for participating. Have a good morning, afternoon or evening depending on where in the world you might be. And whatever, stay safe and take good care of each other. Thank you.