06 April 2020

Will oil and gas companies stick to their energy transitions pledges?

  • When ARPEL launched its White Paper on Energy Transitions https://arpel.org/library/publication/519/ earlier this year, we could see a promising horizon along a blue sky.

    Several companies were pledging a range of GHG emissions reductions, up to 80%, with some of them even aiming at carbon neutrality by 2050.

    We saw a healthy competition for green credentials, with the oil and gas industry defining and fine-tuning strategies clearly committing to support energy transitions to a lower carbon economy. Industry was embracing the change; NOT resisting it.

    News were focused on the extent and timeliness of this industry effort.

    Black storm clouds cover the horizon these days.

    Today, 6 April 2020, the world economy is at a standstill in an unprecedented manner to contain the coronavirus pandemic. Added to the sharp reduction in oil and gas demand created by the pandemic, Russia and Saudi Arabia price war has led to anecdotes(?) with sellers having to pay for their crude to be shipped away by the buyers.

    With staff health protection as first priority, oil and gas companies are struggling to maintain the supply of its products required for the world economy. However, the sector is losing billions; CAPEX cuts are already in the tens of billions, most pre-FID projects are being deferred (some of them indefinitely) and assets sales are the norm for raising cash. Moreover, independent producers are filing for bankruptcy. The oil and gas industry is in survival mode.

    Experts agree this could be the worst recession in the post-war period and that this would be a short recession although followed by long-lasting damage.

    On the 1st of April, the UNFCCC announced its decision to postpone the COP26 UN climate change conference, set to take place in Glasgow this coming November. Very ambitious goals of emissions’ reductions were expected to be decided at the meeting, following global momentum from public and private sectors, strongly pushed by civil society and other stakeholders.

    Given the present situation and the glooming forecast, will oil and gas companies stick to their energy transitions pledges?

    In order to gather the best insight, ARPEL has decided to kick off an open –virtual- discussion among oil and gas companies and its key stakeholders through a one-hour ARPEL live webinar on “Changing strategies in the face of the crisis – Energy transitions and new horizons for oil & gas” to take place on Thursday 23 April 2020 @ 11 am (GMT-3).

    Top executives from the sector will discuss new scenarios, change management policies, future strategies and expected impact in the oil and gas sector.

    Issues associated to ERM, ESG management and performance, technology, investments, portfolios, addressing stakeholders’ expectations, etc. will be openly shared and challenged by the audience.

    Stay tuned at www.arpel.org for further news and details on the webinar.

    Miguel Moyano

    Upstream Director en ARPEL

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