The last couple of weeks have brought repeated bad news and corporate defeats for big western oil corporations. The sector is out of fashion for investors, perhaps permanently, and faces complete transformation if it is to survive. But, on closer examination, these events may not be so bad for big petroleum companies, nor so good for environmentalists.
Two weeks ago, the International Energy Agency issued its key report on reaching net-zero carbon by 2050. It said that no new oil and gasfields were needed to meet remaining demand and that world oil production would decline by 75 per cent and gas by 55 per cent by mid-century.
Shareholders in Chevron and ConocoPhillips defied the companies’ boards to vote in favour of targets to reduce greenhouse gas emissions from the products they sell.
On Wednesday, Shell lost a Dutch court case ordering it to cut carbon dioxide emissions from its sales by 45 per cent by 2030 to keep it in line with the Paris Agreement. Most dramatically, at least two ExxonMobil board members were replaced by pro-climate nominees put forward by activist hedge fund Engine No 1.
The companies are under pressure because of the growing reality of strong climate action and competitive low-carbon technology. But shareholders would have been much more forgiving if their financial results over the past decade were not so miserable.
According to John Kemp from Reuters, the S&P has returned 14.6 per cent annually since 2010 while inflation-adjusted returns from the main oil companies since then are negative for Shell and BP and about 1 per cent a year for ExxonMobil and Total. Even the best performer, Chevron, has managed only 5.1 per cent a year after inflation.
The poor performance is not due to climate policy or energy transition. Oil demand grew until the pandemic while growth in gas was even stronger and prices of both oil and gas averaged well above long-term history.
Instead, the big oil companies' problems have been poorly timed and ill-conceived acquisitions, notably ExxonMobil’s purchase of unconventional gas producer XTO for $41 billion in 2009, overspending, inept project management and portfolio selection, and the pressure to compete with US shale rivals who were lavishly funded and even less profitable.
For at least two decades, oil companies have struggled with a conundrum: back environmental targets that are too aggressive and face the risk of abandonment by shareholders, with management replaced by more conservative figures.
Now that logic is reversed. Five renewable “super majors” – Enel of Italy, Iberdrola of Spain, Orsted of Denmark, Engie of France and NextEra from the US – have a total market capitalisation of $432bn. That is more than half that of the five traditional big oil companies – ExxonMobil, Chevron, Shell, Total and BP – and the gap is closing.
At least the recent shareholder votes have the virtue of clarity. Instead of continuing to support climate change denialism, for which ExxonMobil has faced litigation, all listed petroleum companies need a net-zero carbon commitment and a credible climate and energy transition plan.
If they have fared so poorly at managing their legacy business, they face a stiff task in convincing investors they are the right people to manage wind, solar or batteries. However, they are the natural leaders of hydrocarbon-adjacent projects such as biofuels, hydrogen, carbon capture and storage and energy trading.
So much for the companies themselves. What of the consequences for the environment?
The five big oil companies collectively produce less than 15 per cent of global crude oil. The eight leading national oil companies – Saudi Aramco, Rosneft of Russia, Iraq’s Ministry of Oil, the National Iranian Oil Company, Kuwait Oil Company, PetroChina, Petrobras of Brazil, Adnoc and Pemex of Mexico – account for 38 per cent. Cases such as Shell's will either force the company to move to a new jurisdiction or sell assets to non-European buyers.
Add the remaining Eurasian, Latin American, Middle Eastern and African NOCs, other Chinese state companies, the government-owned or influenced Russian companies and private companies impervious to public shareholders and it is clear that actions aimed at constraining supply from listed western companies will have a limited effect on total volumes produced.
This will be felt at the margins. Insufficient investment in competitive worldwide supply will mean a growing share for NOCs and, especially, the Middle East. This is promising for the plans of Adnoc, Iraq and others to expand capacity. The IEA report predicts this very outcome. In turn, that indicates greater pricing power for the Opec+ alliance, if it endures.
The listed oil companies, unpopular household names, have been an easy target for environmental campaigns. So far, that has blocked various pipelines but not done much to stop oil and gas exploration and development, outside a few marginal areas such as Denmark, France and New York state. President Joe Biden’s agenda will increasingly constrain US production, especially if he wins a second term.
While high prices would appear to be good news for oil producers and companies, they would be bad for everyone. Popular opinion may turn against the decarbonisation agenda in the short term, especially in the US, at a time when we cannot afford another four wasted years. Or we may see a hastier and more wasteful rush to non-hydrocarbon technology and amnesia over the IEA’s other goals – energy security and universal access.
The views of climate campaigners are increasingly becoming mainstream among investors, as the success of Engine No 1 shows. But they must ensure low-carbon alternatives come along as quickly as oil and gas output falls. Otherwise, the next decade of energy transition will be much messier than boardroom battles and courtroom contretemps.
Robin Mills is chief executive of Qamar Energy and author of The Myth of the Oil Crisis
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
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Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Killing of Qassem Suleimani
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
The five pillars of Islam
Zayed Sustainability Prize
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
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The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
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Results
2pm: Handicap Dh 90,000 1,800m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).
2.30pm: Handicap Dh120,000 1,950m; Winner: Just A Penny, Sam Hitchcott, Doug Watson.
3pm: Handicap Dh105,000 1,600m; Winner: Native Appeal, Pat Dobbs, Doug Watson.
3.30pm: Jebel Ali Classic Conditions Dh300,000 1,400m; Winner: Thegreatcollection, Adrie de Vries, Doug Watson.
4pm: Maiden Dh75,000 1,600m; Winner: Oktalgano, Xavier Ziani, Salem bin Ghadayer.
4.30pm: Conditions Dh250,000 1,400m; Winner: Madame Ellingtina, Richard Mullen, Satish Seemar.
5pm: Maiden Dh75,000 1,600m; Winner: Mystery Land, Fabrice Veron, Helal Al Alawi.
5.30pm: Handicap Dh85,000 1,000m; Winner: Shanaghai City, Jesus Rosales, Rashed Bouresly.
TRAP
Starring: Josh Hartnett, Saleka Shyamalan, Ariel Donaghue
Director: M Night Shyamalan
Rating: 3/5
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The stats: 2017 Jaguar XJ
Price, base / as tested Dh326,700 / Dh342,700
Engine 3.0L V6
Transmission Eight-speed automatic
Power 340hp @ 6,000pm
Torque 450Nm @ 3,500rpm
Fuel economy, combined 9.1L / 100km
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Killing of Qassem Suleimani
'Munich: The Edge of War'
Director: Christian Schwochow
Starring: George MacKay, Jannis Niewohner, Jeremy Irons
Rating: 3/5
Specs%20
%3Cp%3E%3Cstrong%3EPower%20train%3A%20%3C%2Fstrong%3E4.0-litre%20twin-turbo%20V8%20and%20synchronous%20electric%20motor%3Cbr%3E%3Cstrong%3EMax%20power%3A%20%3C%2Fstrong%3E800hp%3Cbr%3E%3Cstrong%3EMax%20torque%3A%20%3C%2Fstrong%3E950Nm%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3EEight-speed%20auto%3Cbr%3E%3Cstrong%3EBattery%3A%20%3C%2Fstrong%3E25.7kWh%20lithium-ion%3Cbr%3E0-100km%2Fh%3A%203.4sec%3Cbr%3E0-200km%2Fh%3A%2011.4sec%3Cbr%3E%3Cstrong%3ETop%20speed%3A%20%3C%2Fstrong%3E312km%2Fh%3Cbr%3E%3Cstrong%3EMax%20electric-only%20range%3A%3C%2Fstrong%3E%2060km%20(claimed)%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Q3%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh1.2m%20(estimate)%3Cbr%3E%3Cbr%3E%3C%2Fp%3E%0A
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So what is Spicy Chickenjoy?
Just as McDonald’s has the Big Mac, Jollibee has Spicy Chickenjoy – a piece of fried chicken that’s crispy and spicy on the outside and comes with a side of spaghetti, all covered in tomato sauce and topped with sausage slices and ground beef. It sounds like a recipe that a child would come up with, but perhaps that’s the point – a flavourbomb combination of cheap comfort foods. Chickenjoy is Jollibee’s best-selling product in every country in which it has a presence.
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The Voice of Hind Rajab
Starring: Saja Kilani, Clara Khoury, Motaz Malhees
Director: Kaouther Ben Hania
Rating: 4/5
RESULTS
Manchester United 2
Anthony Martial 30'
Scott McTominay 90 6'
Manchester City 0
UAE currency: the story behind the money in your pockets
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
HIJRA
Starring: Lamar Faden, Khairiah Nathmy, Nawaf Al-Dhufairy
Director: Shahad Ameen
Rating: 3/5
