Climate and Coronavirus Dominate Oil Industry’s Biggest Summit

Two dark clouds loomed over the oil industry’s biggest gathering of traders and producers this year: climate change and the coronavirus.

Last year, protesters glued their hands to the doors of the conference venue complaining of record winter heat. This year, climate experts were invited in and given the floor.

Industry executives were given a blunt warning. Continued production of fossil fuels was a path to the industry’s own “obsolescence and destruction,” said Bob Ward, a policy and communications director at a climate unit of the London School of Economics.

The energy transition, lowering carbon emissions and accelerating toward a greener future dominated the first day of discussions at the conference. Global emissions may flatline around current record levels, putting the world on track for a temperature increase of about 3 degree Celsius, International Energy Agency Executive Director Fatih Birol told delegates.

Virus Fears

Big Oil heads were also notably absent from the event. In what’s normally a week of lavish parties, deal-making and networking, events were canceled and some executives didn’t travel at all amid fears of the spread of coronavirus.

The Kuwait Petroleum Co. party on Monday evening maintained its usual high standard of catering, although the attendance level did fall far short of previous years.

The company’s party signature dishes were on display: an entire lamb carved by waiters, trays of exotic fruit juice, a generous dessert stand and a fountain of molten chocolate. But the crowds were much thinner than normal, with a notable absence of executives from the world’s biggest oil companies. On arrival, visitors received a physical reminder of why: they were presented bottles of hand sanitizer.

The empty seats and uneaten party food at IP Week are a stark reminder of an epidemic that began thousands of miles away in China and is having an increasingly serious impact on public health and oil consumption globally.

Vitol Group, the world’s biggest independent oil trader, estimates that the virus is currently reducing China’s crude demand by about 4 million barrels a day, about 4% of global consumption. Fears that the virus will continue to curb consumption in the world’s biggest petroleum consumer, and elsewhere, have been pummeling prices.

Climate Pressure

The outbreak is the short-term challenge, but on a longer timescale the main pressure on Big Oil is under increasing pressure to demonstrate how it will not only curb carbon emissions from its operations but also to align its business model with the Paris agreement. Pension funds and other investors are bearing down on fossil fuel producers and even dumping funds not seen to be compatible with climate goals.

“You go to a dinner and say you’re the CEO of an energy company and immediately you’re under attack,” Energean Oil & Gas SA boss Mathaios Rigas told delegates at the conference on Tuesday.

BP Plc’s Bernard Looney is the only Big Oil chief due to speak at the event, at a dinner on Thursday marking the end of the conference. The company set out the boldest climate plan of any oil major this month, pledging to eliminate almost all carbon emissions from its operations and the fuel it sells to customers. It followed a pledge in December by Spanish oil major Repsol SA to cut carbon emissions to net-zero by 2050.

Norway’s Equinor ASA said Tuesday it has dropped plans for oil drilling deep in the ocean off Australia’s south coast following a sustained campaign from environmentalists.

While industry executives didn’t outline on Tuesday how they were going to curb their emissions, they called for much higher carbon prices and incentives to ramp up clean energy investments.

“We are the industry that has the people, the projects, the cash flow and the motivation to take on this global challenge,” Al Cook, a global strategy executive at Equinor, said in an interview.

— With assistance by Grant Smith

Source: Read Full Article