Oil and gas prices are at multi-year highs and the world is experiencing a shortage of fossil fuels, but companies are looking at emissions targets as shareholders demand cleaner, greener operations.
The Wall Street Journal is reporting that members of the ExxonMobil [XOM] board are questioning whether to continue with oil and gas projects in Mozambique and Vietnam.
The company is said to be reconsidering its investment strategy, with concerns expressed about a $US30bn liquefied natural gas development in Mozambique and a multibillion dollar gas project in Vietnam.
The Wall Street Journal said Exxon is analysing the expected carbon emissions from each project and how it might affect the company’s ability to meet pledges to reduce emissions.
World leaders agreed to limit temperature rises to 1.5C in Paris in 2015. Now they must use the Glasgow COP 26 summit that starts 31 October to demonstrate what climate change commitments they will make to achieve that aim.
ExxonMobil’s share price has been on the up.
Growing demand for oil and gas has seen energy majors higher across the board with ExxonMobil’s share price up more than 12% over the past month, and while that’s not as red hot as Shell’s [RDSB] 23% gain over the same period, that’s well above the wider S&P 500’s flat trading over the same stretch.
However, this is a sector in transition as the world moves away from fossil fuels. Arguably Exxon has been slow to move, but its large investment in carbon capture technology could see it well-positioned to benefit as demand for the technology increases.
Rising commodity prices naturally have a correlation with ExxonMobil’s share price gain. Governments the world over are putting ambitious targets on becoming carbon neutral. For the shift to cleaner energy, the firm is looking towards carbon capture technology.
ExxonMobil Corp is building a $US100bn plant in Houston that is attracting a lot of attention. The plant could capture up to 76mn tonnes per annum (tpa) of CO2 by 2024. Eleven companies have expressed interest in working on the project.
Other companies are taking a different approach. Woodside Petroleum expects booming oil and gas prices to lift earnings in fourth quarter 2021 as it closes in on a $40bn merger with BHP Petroleum.
Santos is waiting for the results of a November 29 meeting of shareholders to see if it can move forward with its proposed $21bn merger with Oil Search.
Demand for Australian coal and gas is expected to plunge amid a global push to boost climate change ambitions, according to the latest World Energy Outlook from the International Energy Agency.