Oil industry executives on Wednesday said they more or less backed the agreement coming out of the United National climate summit in Dubai, despite its language calling for “transitioning away from fossil fuels.”
“We support the outcome of COP28,” said a spokesman for Shell, Europe’s largest energy company.
Eni, the Italian energy giant, praised the “great pragmatism” of the meeting.
Saudi Arabia, the de facto leader of OPEC, which had raised objections to an early draft of the agreement, endorsed the final deal, saying it left countries free to choose their own direction in addressing climate change.
“Dictating things has been buried,” said Prince Abdulaziz bin Salman, the Saudi oil minister, in an interview with Al Arabiya television. “And so people are free in their choices,” he added. The Saudi minister also said the COP28 deal would not have an impact on the country’s ability to sell crude oil, according to the outlet.
The agreement’s appeal to oil producers is probably the lack of requirements to take specific actions. As a result, countries can choose their own pathways to reduce the greenhouse gas emissions that cause climate change. The sweeping agreement, approved by diplomats from nearly 200 countries, even seems to suggest a role for natural gas, a fossil fuel that has attracted heavy investment in recent years from large oil companies, in “facilitating the energy transition.”
The leaders of producing countries had worried that the meeting might come up with stricter prescriptions to curb the use of fossil fuels. [Continue reading…]
However vague or watered down the language, the deal looks out of touch with reality.
US oil production is at a record; India plans to double coal output by 2030; the UK is issuing new drilling licences in the North Sea; and American oil majors are splurging billions on deals that signal they see robust demand for decades to come.
“Anything less than a systematic transformation of the fossil fuel industry would be at odds with COP28’s deal,” said Daniel Klier, the CEO of ESG Book, a provider of sustainability data on companies. “The reality is no single climate summit can single-handedly drive the transition away from fossil fuels, let alone a phase out.”
The latest evidence of the industry doubling down on fossil fuels came Monday, when Occidental Petroleum said it would pay $12 billion in cash and stock to buy US shale oil producer CrownRock.
It followed ExxonMobil’s October announcement of a $60 billion deal to acquire shale driller Pioneer Natural Resources, and Chevron’s agreement less than two weeks later to buy shale producer Hess for $53 billion. Hess also has large oil assets in Guyana, which Chevron said would help grow its production over the next decade.
Another $50-billion oil and gas deal could take shape soon, this time in Australia. Woodside Energy and Santos are talking about a merger that would create one of the world’s biggest exporters of liquified natural gas (LNG) in a clear bet on continued strong demand from Asia for the fuel. [Continue reading…]