Here’s Big Oil’s dilemma. Its main products are oil and gas, and the energy transition is rapidly under way. Utilities are building solar and wind capacity, EV battery plants are under construction, and start-ups are building networks of charging stations. Where might oil companies compete?

They could choose to play in these areas, and indeed a number of European oil companies – including Total, BP and Shell – are going full speed ahead on these fronts.

Big Oil is also going big in petrochemicals, as it views this as a key growth business in contrast to the long-term prospects for transportation fuels. Shell will boost its petrochemicals footprint while it dramatically scales back refining capacity.

But do oil and gas companies have a competitive edge in renewables? They have the size and are used to making large-scale capital investments. But their core competency has been in oil and gas exploration and running hydrocarbon operations – including downstream petrochemicals.

So what renewable energy plays into the strengths of Big Oil?

Hydrogen is likely the solution – blue hydrogen, which is produced in hydrocarbon operations along with CCS (carbon capture and sequestration), and even green hydrogen, which is produced by solar and wind energy.

Oil companies already have the expertise in producing and using hydrogen in their operations, and are well placed to transform this hydrogen into ammonia for long-distance shipments. They have the operational capability to handle ammonia at large scale and the logistics networks to distribute it to customers worldwide.

“The big oil companies have economies of scale, experience in handling, existing infrastructure, storage and logistics, as well as the contacts to participate in this new, large, exciting and potentially very lucrative sector,” said Richard Ewing, international ammonia market editor at ICIS.

“Many oil companies will look at blue ammonia in the short term as there is already much of the infrastructure there, and there is less capex [capital expenditures] needed than investing in a completely new project like a green hydrogen/ammonia plant, where a lot of the technology is still under development,” he added.