Climate Rules Could Put $1.1 Trl In Oil Investment At Risk

Posted by Joseph R. Fonseca
Wednesday, May 07, 2014

 

Investors could spend up to $1.1 trillion over the next decade on oil projects and assets that never reach production if governments enforce measures to curb climate change, a report by Carbon Tracker Initiative said.

The Carbon Tracker report, released on Thursday, could help funds and other investors avoid putting their money in oil assets that remain buried forever.

The $1.1 trillion, around 15 percent of the decade's total global oil and gas spending at current rates, is earmarked for projects to 2025 that require a market price of at least $95 a barrel to break even.

That investment is at risk if governments enforce plans to curb the global rise in temperatures to 2 degrees Celsius, which scientists say is the threshold for avoiding the worst effects of climate change.

Almost 200 nations have endorsed that goal and are due in 2015 to sign up to cut greenhouse gas emissions to help meet it.

Those measures will cut demand for fossil fuels including oil and lower prices and revenues, according to the report.

"Gambling on a $95/bbl oil price on behalf of shareholders is risky, given that oil prices have dropped to $40 per barrel twice in the last decade," James Leaton, Carbon Tracker's research director, said in a statement released on Thursday.

The International Energy Agency (IEA) said last year that even under current policies half of proven fossil fuel reserves would be left undeveloped to 2050 and that this percentage would increase as governments impose tougher curbs.

The oil industry is coming under increasing pressure from investors to reduce exposure to high-cost, risky projects and also to report the risks to their business from climate policies.

"The Carbon Tracker report will be useful to investors engaging oil companies on whether they are using shareholder capital prudently as we transition to a lower-carbon future," Anne Stausboll, chief executive of Calpers, the largest U.S. public pension fund in the United States, said in a statement.

HIGH EXPOSURE

Benchmark Brent crude is trading at around $107 a barrel and has mostly held above $100 for the past three years.

Spurred by the historically high prices, companies have increased exploration in areas such as the Arctic and ever-deeper coastal waters.

The private sector is the major funder of these high cost projects, exceeding state-owned producers such as Russia's Rosneft and Saudi Aramco.

Smaller independent producers have the highest percentage exposure, but big firms including Exxon Mobil Corp, Royal Dutch Shell and Total have significant parts of their portfolios at risk, Carbon Tracker said.

Many companies say they are addressing climate policies by focusing on energy efficiency and low-carbon technologies such as renewable power generation and carbon capture and storage.

Exxon, the world's largest publicly traded oil company, has said there is little risk to its reserves because they will be needed to meet expected growth in energy demand.

The Carbon Tracker Initiative is funded by several U.S. and European foundations, including the Rockefeller Brothers Fund and the Joseph Rowntree Charitable Trust.

(editing by Jane Baird)

Maritime Reporter September 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Technology

Australia Join Operation RENDER SAFE

Australian Defence Force (ADF) personnel have arrived in Bougainville to address a potentially deadly legacy posed by unexploded ordnance from past conflicts as part of Operation RENDER SAFE 2014.

Georgia Delegation visit Naval Academy "NYVaptsarov"

From 15 to 17oktomvri 2014. Naval Academy "N. Vaptzarov "hosted a delegation from Georgia led by prof. Sharabidze Irakli - Rector of the State Maritime Academy, city.

Asia-Pacific Solar Collaboration Conference

The Australian Photovoltaic Institute is holding the inaugural Asia-Pacific Solar Research Conference at the University of New South Wales in Sydney from 8-10 December 2014.

Contracts

Total CEO Killed in Moscow Runway Accident

Private jet collided with snow plow during takeoff; Total's CEO a defender of Moscow policies. Insiders Boisseau and Pouyanne long seen as potential successors.

Offshore Oil: Lamprell Completes Caspian Sea Drilling Unit

UAE-based Lamprell said that it completed construction of the second Caspian Sea jackup drilling rig, Mercury, for service in the Caspian Sea.   "I am delighted

Salamander Energy Updates on SONA Transaction

Salamander Energy said it has submitted a draft shareholder circular to the Financial Conduct Authority in relation to previously stated plans to divest of an interest in the Greater Bualuang Area.

Environmental

Australia Join Operation RENDER SAFE

Australian Defence Force (ADF) personnel have arrived in Bougainville to address a potentially deadly legacy posed by unexploded ordnance from past conflicts as part of Operation RENDER SAFE 2014.

Asia-Pacific Solar Collaboration Conference

The Australian Photovoltaic Institute is holding the inaugural Asia-Pacific Solar Research Conference at the University of New South Wales in Sydney from 8-10 December 2014.

Lavrov: No need for NATO in the Arctic

During the open lecture on Russia’s foreign policy, Foreign Minister Sergei Lavrov stated that he could see no need for NATO presence in the Arctic. ‘From time to time,

Energy

Asia-Pacific Solar Collaboration Conference

The Australian Photovoltaic Institute is holding the inaugural Asia-Pacific Solar Research Conference at the University of New South Wales in Sydney from 8-10 December 2014.

Pentair Reports 3Q 2014 Sales of $1.8 bi

Pentair plc today announced third quarter 2014 sales of $1.8 billion. Sales were up 3 percent compared to sales for the same period last year. Third quarter 2014

FortisBC Starts Expansion of Tilbury LNG Facility

FortisBC – a subsidiary of Fortis Inc. has officially started construction of its $400 million Tilbury LNG Facility expansion project today. The company is adding 1.

News

AMSA Rescues 2 East of Darwin After Boat Sinks

The Australian Maritime Safety Authority (AMSA) coordinated the rescue of two men early this morning East of Darwin. About 4.30am AEDT this morning, AMSA detected

Georgia Delegation visit Naval Academy "NYVaptsarov"

From 15 to 17oktomvri 2014. Naval Academy "N. Vaptzarov "hosted a delegation from Georgia led by prof. Sharabidze Irakli - Rector of the State Maritime Academy, city.

Asia-Pacific Solar Collaboration Conference

The Australian Photovoltaic Institute is holding the inaugural Asia-Pacific Solar Research Conference at the University of New South Wales in Sydney from 8-10 December 2014.

 
 
Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Salvage Ship Electronics Ship Simulators Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1774 sec (6 req/sec)