Page 16 - FSUOGM Week 39

FSUOGM PROJECTS & COMPANIES FSUOGM

BP, Shell create "existential crisis" for

oil with renewables shift: Rosneft

RUSSIA MOVES by BP and Royal Dutch Shell to bolster warned that oil demand may never again reach
their renewable operations are creating an “exis- pre-pandemic levels. The UK major’s new direc-
With the majors leaving tential crisis” for oil supplies, Russian oil major tion has been praised as bold, but its share price
oil behind, national oil Rosneft has warned. has suffered, suggesting that investors have
companies will be there One of the Kremlin-controlled company’s doubts whether its strategy is feasible.
to fill the supply void, top executives Didier Casimiro criticised the The response of Rosneft and other NOCs to
Rosneft says. international oil companies (IOCs) for shifting the growing calls for decarbonisation has largely
away from oil and gas in favour of cleaner energy. been mute. The world, they argue, will need
Cuts to oil and gas investment will cause supply growing amounts of oil and gas over the coming
shortages as demand recovers to pre-pandemic years regardless of rhetoric, and they want to be
levels, he said at a Financial Times (FT) summit. there to supply it.
This will lead to higher prices, he said. BP has a 19.5% stake in Rosneft – a legacy of
Rosneft and other NOCs will step in and its decades of investing in Russia. The UK major
expand their market share to compensate for has faced pressure to divest from the company
reduced supply from their privately-owned because of its heavy carbon footprint and the
rivals, he continued. risk of additional US sanctions being imposed
‘I think that to go away from your core busi- on Russia. But so far it has resisted such calls.
ness, which is what they are doing, somebody Casimiro, who was blacklisted earlier this
will need to step in ... somebody will need to take year as part of penalties imposed on two Rosneft
that responsibility,” Casimiro said. “It is an exis- trading divisions which were caught handling
tential threat for supply. It is an existential threat Venezuelan oil, said weak prices were curb-
for price volatility ... we will have a [supply] ing US oil supply. But it might recover if crude
crunch, price volatility, and yes, higher prices.” rebounds to $50 per barrel, he said.
Rosneft counts BP as one of its main share- “The question is to what extent they can
holders, but the pair’s strategies have diverged regain the market share that was previously
considerably over the past year. Under its new there,” he said.
CEO Bernard Looney, BP has pledged to become International Energy Agency (IEA) head
a net-zero emissions company by 2050, and this Fatih Birol shares the concern about peak oil
plan will entail the company slashing its oil and demand, and has called on oil-dependent econ-
gas production by 40%, while boosting its invest- omies like Russia to diversify.
ments in renewables tenfold. “It has never been so urgent as it is today,” he
BP is among a number of European majors said. “There will be no oil and gas country that is
to embrace the energy transition and recently not affected by the energy transition.” ™

P16 www. NEWSBASE .com Week 39 30•September•2020