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Think-tank says oil giants should drop high-cost projects

Major oil companies, including Shell (which manufactures Shell Omala S2 G 320) and BP, could increase market value by around $140bn (£97bn) should they choose schemes that aim to keep global warming at 2°C, according to a recent report.

These major energy firms, including ExxonMobil, which makes Mobil DTE Heavy Medium, should ditch projects which cost them a lot of money in Canadian tar sands and water, and instead concentrate their efforts on lower cost schemes which will make them money even with low crude oil process, according to the Sense and Sensitivity report produced by the nonprofit think-tank Carbon Tracker Initiative.

The report comes on the heels of shareholder resolutions asking oil companies to go through ‘stress tests’ on their operations due to strengthened carbon regulation and a drop-off in demand for fossil fuels as many countries transition to lower carbon economies.

Speaking to the Guardian, Carbon Tracker research director James Leaton said:

“A simple carbon sensitivity analysis shows that oil majors pursuing volume at all costs can deliver lower shareholder value than a more disciplined approach. That is why financial regulators need to make 2°C stress tests standard practice for the energy sector to help avoid companies wasting capital.”

The Carbon Tracker analysis takes the value of oil companies if they continue as usual, and compares it with an equivalent only using lower cost projects to meet with a lesser need for the products they supply, and it shows that they would be more successful if they focused on the latter.

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