SDX Energy is working on the implementation of an ESG strategy, which can do good while also acting as a differentiator from its peers.
“Our approach started around 12 months ago, when we were putting together the 2019 annual report, which included ESG. We started discussing what it meant for SDX, what metrics we should consider, and we’ve been working on that throughout the last 12 months,” SDX’s CFO Nick Box told Energy Voice.
Box acknowledged there was a risk that some could see an ESG focus as greenwashing, but insisted that the company’s work ran deeper. “The fact of the matter is that we have a good story to tell. In this environment, that can be a differentiator.”
ESG, he continued, can help set SDX apart from its competitors, with the aim of securing investment and capital. “We do ourselves a disservice if we can’t bring forward the message about taking ESG seriously.”
There has been “consistent feedback from current and prospective investors” that the ESG initiative is moving in the right direction.
That SDX primarily produces gas helps play to its ESG focus. Box noted the role that gas will play in the energy transition, particularly in Morocco where the alternative are higher-polluting feedstocks.
This gas focus does not rule out a potential future acquisition of oil. “We need to have a degree of pragmatism. We’re a small company looking to grow and that will come from organic and inorganic roots,” Box said.
There are gas opportunities in Morocco, particularly in targeting deeper resources, where the company has announced the Top Nappe play. It will test this play further with four or five wells in 2021. In Egypt, it plans to drill the Hanut-1X well in the third quarter.
However, if a “compelling oil deal came along it would not be right for us not to consider it”, Box said. “Where we found such an opportunity, we would look to bring some ESG upside.”
This might involve tackling associated gas or increased efficiency in transportation. “If it’s the right deal, you have to consider it, but within that, what can you from an environmental perspective?”
In Morocco, the company supplies industrial customers across a range of sectors, providing an alternative to heavier fuels, from diesel to LPG. SDX expects that its work in Morocco saves 60,000 tonnes per year of CO2 equivalent.
Meanwhile, in Egypt, the company aims to be “as environmentally friendly as we can be”. During 2019, it installed energy efficiency measures, with equipment powered by natural gas rather than diesel.
As a result, production carries a carbon intensity of less than 5 kg per boe, Box said. In Morocco, carbon intensity is “very low. We’re working to put a value on that.”
The E in ESG tends to dominate such conversations. That said, SDX has also invested socially, helping support a primary school in a community near South Disouq. Meanwhile, governance is SDX’s “bread and butter”, Box said.