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 June 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Contracts

ISS Inks Service Pact with Technip

Inchcape Shipping Services (ISS) and Techniphave signed a contract to provide marine agency services and logistics for the Rashid C project in the Middle East. Currently

Hercules-2 Officially Launched

MAN Diesel & Turbo, Wärtsilä and Winterthur Gas & Diesel to collaborate on major, EU-funded project.   A major cross-industry initiative led by MAN Diesel & Turbo,

ST Marine Launches First LMV for RSN

Singapore Technologies Marine Ltd (ST Marine), the marine arm of Singapore Technologies Engineering Ltd (ST Engineering), held the Launching ceremony for the first

Legal

K&L Gates Welcomes Martinko

The Washington D.C., office of global law firm K&L Gates LLP has welcomed Stephen Martinko as a government affairs counselor in the public policy and law practice.

ST Marine Launches First LMV for RSN

Singapore Technologies Marine Ltd (ST Marine), the marine arm of Singapore Technologies Engineering Ltd (ST Engineering), held the Launching ceremony for the first

Antwerp Joins “One Belt, One Road” Taskforce

“One Belt, One Road” is a Chinese development strategy launched at the end of 2013 that focuses on connectivity and cooperation among countries primarily in Eurasia.

Finance

Navis N4 TOS Open in Liverpool Terminal

Peel Ports, owners and operators of the Port of Liverpool, has achieved a major milestone in its multi-million investment program to transform the port into Europe’s

AkzoNobel’s Carbon Credits Methodology Wins Award

AkzoNobel’s landmark carbon credits methodology for the shipping industry has won the Best Offsetting Project award in the 2015 Voluntary Carbon Market Rankings.

FSL Trust Inks Tanker Contracts

FSL Trust Management Pte. Ltd., as trustee-manager of First Ship Lease Trust announced new time charter agreements for FSL Shanghai, FSL Hamburg and FSL Singapore.

Environmental

Port of New Orleans Goes Green

Green Marine, a North American environmental certification program for the marine, port and terminal industry, officially recognized the Port of New Orleans recently as a certified Green Port.

AkzoNobel’s Carbon Credits Methodology Wins Award

AkzoNobel’s landmark carbon credits methodology for the shipping industry has won the Best Offsetting Project award in the 2015 Voluntary Carbon Market Rankings.

GEORG FORSTER Calls Southampton for the First Time

The CMA CGM Group announced that the CMA CGM GEORG FORSTER called England for the first time on July 6th.    With its 1,305 ft. (398m) length and 177 ft. (54m) width,

Energy

White House: Iran Talks Deadline Could Slip

The White House said Tuesday's deadline for negotiators in Vienna to come to a final, firm agreement on Iran's nuclear program could slip. When asked if President

Port of New Orleans Goes Green

Green Marine, a North American environmental certification program for the marine, port and terminal industry, officially recognized the Port of New Orleans recently as a certified Green Port.

K&L Gates Welcomes Martinko

The Washington D.C., office of global law firm K&L Gates LLP has welcomed Stephen Martinko as a government affairs counselor in the public policy and law practice.

News

White House: Iran Talks Deadline Could Slip

The White House said Tuesday's deadline for negotiators in Vienna to come to a final, firm agreement on Iran's nuclear program could slip. When asked if President

SUNY Maritime College to Host e-Navigation Underway 2015

The State University of New York Maritime College will host the e-Navigation Underway 2015 – North America conference from September 28 to 30 on its Throggs Neck, N.

Port of New Orleans Goes Green

Green Marine, a North American environmental certification program for the marine, port and terminal industry, officially recognized the Port of New Orleans recently as a certified Green Port.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Naval Architecture Pipelines Pod Propulsion Port Authority Salvage Ship Electronics Ship Simulators
rss | archive | history | articles | privacy | 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: 0.2725 sec (4 req/sec)