Big Oil companies back agreement to prevent climate change

By ANGELINA RASCOUET AND MAHER CHMAYTELLI on 10/16/2015

LONDON (Bloomberg) -- Ten major energy companies declared their support for a global deal to prevent climate change, but stopped short of offering unanimous backing for carbon pricing.

Producers including BP Plc, Saudi Arabian Oil Co. and Petroleos Mexicanos -- who together account for almost 20% of the world’s oil and gas output -- said in a statement that they will back policies consistent with the goal of keeping the increase in average global temperatures to within 2°C (3.6°F).

The joint conference in Paris Friday follows a June letter from BP, Eni SpA, Royal Dutch Shell Plc, Total SA, Statoil ASA and BG Group Plc urging governments to agree to carbon pricing at the UN's so-called COP21 climate change summit starting in the French capital next month. While the new Oil and Gas Climate Initiative added the support of companies from Saudi Arabia, Mexico and India, the broader group didn’t agree a common position on whether companies should pay a price to emit greenhouse gases.

“The OGCI doesn’t have a position on CO 2 pricing, not a common one,” Helge Lund, CEO of BG Group, told Bloomberg News at the conference in Paris. “The European companies have written a letter to the UN where we strongly support it,” Lund said, without naming the companies that didn’t back carbon pricing.

Chinese Companies

The OGCI includes BG Group, BP, Eni, Pemex, Reliance Industries Ltd., Repsol SA, Saudi Aramco, Shell, Statoil and Total.

“Our shared ambition is for a 2 degree Celsius future,” the 10 CEOs said in a joint statement. “Over the coming years we will collectively strengthen our actions and investments to contribute to reducing the greenhouse gas intensity of the global energy mix.”

While no U.S.-based companies are part the group, one big producer from China should join this year, said Total CEO Patrick Pouyanne. China is the world’s biggest emitter of carbon dioxide.

“It’s an open club, whoever wants to come is welcome,” Pouyanne said on the sidelines of Friday’s conference. “Most of my U.S. peers are also engaged in the climate change” issue, he said, adding that some of the oil companies present in Paris also had major U.S. operations.

Exxon Mobil Corp. said in May, it wasn’t going to “fake it” when it came to its views on climate change, arguing that technology can provide solutions to any impacts that result from increasing global temperatures.

Saudi Reserves

Saudi Aramco, the largest producer present in Paris with daily crude output of about 10 MMbbl and 260 Bbbl of reserves, will not reduce its oil-production capacity, CEO Amin Nasser said.

“Oil will continue to contribute to prosperity over the long-term” and Saudi Arabia will maintain production capacity of 12.5 MMbpd, Nasser said. “But we need to decouple the production of oil from carbon emissions” using technology to capture the gas and convert it into other useful chemicals, he said.

The “overwhelming majority” of Middle East oil reserves and 60% of its gas reserves must remain unburnt to prevent an increase in global average temperatures of more than 2°C, researchers at University College London said in a January report.

Oil Prices

Environmental groups said oil producers are still part of the problem.

“The oil companies behind this announcement have spent years lobbying to undermine effective climate action,” Charlie Kronick, a campaigner at Greenpeace, said in an e-mailed statement. “Suddenly they expect us all to see them as the solution, not the problem. The world should thank them for their offer of advice and politely turn it down.”

The almost 60% slump in oil prices since June last year could make curbing emissions more difficult, Total’s Pouyanne said. “I’m not sure it will help because when the oil price is low, the demand for oil is higher,” he said.

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