Oil supermajors’ mega-bet on natural gas
Is the least grubby hydrocarbon a bridge fuel to a greener future, or a trap?
Energy companies have no seat at the climate high table convened by President Joe Biden on April 22nd and 23rd, to which he has invited 40 other world leaders to discuss how to speed up the shift from dirty energy. From the sidelines, coal firms will scowl at efforts to curb demand in Asia and oil drillers will wince at support for electric cars. Watching particularly closely will be those companies which have bet big on natural gas. As the energy transition gathers momentum, no fuel’s future is hazier than that of the least grubby hydrocarbon.
Proponents see gas as the “bridge fuel” to a greener world. They include the five largest international oil firms: ExxonMobil, Chevron, Royal Dutch Shell, Total and bp. These supermajors saw gas rise from 39% of their combined hydrocarbon output in 2007 to 44% in 2019 (see chart 1). That year producers approved a record level of liquefied natural gas (lng) capacity. Those projects will come online in a few years. Shell, which in 2016 paid $53bn for bg, a British gas group, now says its oil production peaked in 2019, but that it will expand its gas business with annual investments of about $4bn. Total expects its crude output to sink over the next decade, but for gas to rise from 40% to 50% of sales. In February Qatar Petroleum, a state-owned giant, said it would begin the largest lng project in history.
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