Oil majors are under growing pressure to stop drilling for crude to help curb climate change, but companies have said that they would wean themselves off fossil fuels at their own pace.
The demand for change is coming from many sides: Lawsuits, shareholders and the International Energy Agency (IEA) have all turned up the heat on firms.
Last week alone, a Dutch court ordered Royal Dutch Shell PLC to slash its greenhouse gas emissions, and investors used shareholder meetings to install activist board members at US oil giant Exxon Mobil Corp and demand deeper emissions cuts at rival Chevron Corp.
The IEA last month sent shockwaves through the industry when it declared that no fossil fuel exploration, or new oil and natural gas fields are needed due to a “rapid drop” in demand.
The intergovernmental organization made the suggestion in a report warning that all future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050.
The agency, which advises developed countries, has in the past been criticized by environmentalists for being too timid while calling for oil investments to ensure supply.
BP PLC chief executive officer Bernard Looney told the Columbia Global Energy Summit that the report was “very much in line” with the British energy company’s strategy.
However, Looney also said that while the report sees much lower investment in fossil fuels, it is “still investment in oil and gas.”
“At the end of the day [the report] is a scenario on a piece of paper, and what the world needs more than anything is maybe less scenarios and maybe less debate ... and more action,” he said, adding that BP plans to reduce oil and gas production by 40 percent within the next decade.
“It’s really a question of rhythm,” said Nicolas Berghmans, an energy research fellow at the Institute for Sustainable Development and International Relations, a Paris-based think tank.
Companies “are not going as fast as the IEA thinks is needed,” he said, adding that they “are lagging behind” in their transition.
Oil and gas exploration has slowed down over the past two years, but this was largely due to effects of the COVID-19 pandemic.
Last year, huge fields were discovered in Russia, Turkey and Suriname.
A report by the consultancy Westwood Global Energy Group found “no evidence of a systematic change in industry exploration strategy” with regards to energy transition.
The group expected dozens of exploration drilling operations this year, including in Mexico, Brazil, Suriname and Guyana.
Patrick Pouyanne, chief
executive officer of TotalEnergies SE, a French energy group that changed its name last week, has bluntly said that the company would not give up oil overnight.
“In energy transition there is the word ‘transition,’ and I would like to remind everyone that today we live, our economy functions on 80 percent fossil fuel energies,” Pouyanne said last week, warning against “radicalism.”
He said that it would take time to switch to other sources of energy for transport or heating while oil demand rises in countries such as China and India.
“It’s nice to say that we need to stop producing oil, but if there are no longer enough projects or production, what will happen? Prices will rise,” Pouyanne told Europe 1 radio.
Following the IEA’s recommendations would cause the prices of oil to surge to US$100 per barrel in the next few years, he said.
The price is currently below US$70.
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