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

Contracts

Diana Charters Containership to Maersk

Container shipping company Diana Containerships Inc. announced that, through a separate wholly-owned subsidiary, it entered into a time charter contract with Maersk

BG Awards Fugro MBES, Seabed Coring Contract

Fugro has been awarded a contract by BG International Limited Sucursal Honduras to conduct an integrated multibeam echosounder (MBES) survey and seabed coring campaign

GasLog Orders Two LNG Carriers

GasLog Ltd. today announced that it has ordered two new 174,000 cubic meter LNG carriers from Hyundai Heavy Industries Co., Ltd. ("Hyundai") in South Korea.

Legal

Harper Government Invests in Naufrage Harbor

The Honorable Gail Shea, Minister of Fisheries and Oceans, announced today an investment to improve safety and working conditions for fishermen at Naufrage Harbor, Prince Edward Island.

Ondimar Firms Order Suezmax Quartet at Navantia

Navantia and Maritime Transport Ondimar LDA (shipping company Ibaizabal Group) today ratified the contracts signed in late June and the financial structure for

Contship Italia Signs Iran MoU

Contship Italia Spa, also on behalf of Eurogate GmbH & Co. KGaA, KG, recently signed a strategic Memorandum of Understanding (M.O.U.) with Sina Port & Marine Company (SPMCO),

Finance

Harper Government Invests in Naufrage Harbor

The Honorable Gail Shea, Minister of Fisheries and Oceans, announced today an investment to improve safety and working conditions for fishermen at Naufrage Harbor, Prince Edward Island.

Strategic Marine’s Stock Program Full Power Ahead

Strategic Marine, the specialist shipbuilder and fabricator, has confirmed its stock program of personnel transport vessels is market-ready. “Our stock program

Shift to Contract Labor in U.S. Maritime, Offshore Sectors Underway

Maritime and Offshore recruiter Faststream has reported a shift in attitude towards temporary, project and consulting work following a recent survey to over 1,000 candidates in North America.

Environmental

Canada's First LNG Ferry Launches with Bestobell Valves

Bestobell Valves is celebrating supplying cryogenic valves to Canada’s first LNG-fuelled ferry – the MV Armand-Imbeau II, which has recently been launched.   It

Harper Government Invests in Naufrage Harbor

The Honorable Gail Shea, Minister of Fisheries and Oceans, announced today an investment to improve safety and working conditions for fishermen at Naufrage Harbor, Prince Edward Island.

Fire Aboard USS Mount Whitney

A fire broke out on board USS Mount Whitney (LCC 20) while the ship was in Viktor Lenac Shipyard (Rijeka, Croatia) July 31, 2015. There were no personnel injuries in the fire,

Energy

BG Group Starts up Sixth FPSO in the Santos Basin

BG Group announced first oil from the Cidade de Itaguaí floating, production, storage and offloading (FPSO) vessel, the sixth unit to start production across the

GasLog Orders Two LNG Carriers

GasLog Ltd. today announced that it has ordered two new 174,000 cubic meter LNG carriers from Hyundai Heavy Industries Co., Ltd. ("Hyundai") in South Korea.

Ondimar Firms Order Suezmax Quartet at Navantia

Navantia and Maritime Transport Ondimar LDA (shipping company Ibaizabal Group) today ratified the contracts signed in late June and the financial structure for

News

BG Group Starts up Sixth FPSO in the Santos Basin

BG Group announced first oil from the Cidade de Itaguaí floating, production, storage and offloading (FPSO) vessel, the sixth unit to start production across the

Diana Charters Containership to Maersk

Container shipping company Diana Containerships Inc. announced that, through a separate wholly-owned subsidiary, it entered into a time charter contract with Maersk

GasLog Orders Two LNG Carriers

GasLog Ltd. today announced that it has ordered two new 174,000 cubic meter LNG carriers from Hyundai Heavy Industries Co., Ltd. ("Hyundai") in South Korea.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Naval Architecture Navigation Pod Propulsion Ship Electronics Ship Repair Shipbuilding / Vessel Construction Sonar
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: 0.2174 sec (5 req/sec)