What Exxon, Chevron, Shell, Bp do and not just on oil

After years of extracting more and more oil and gas, Western energy giants such as BP, Royal Dutch Shell, Exxon Mobil and Chevron are slowing production as they switch to renewable energy or cut costs after being hit by the pandemic. Writes The New York Times .

But that doesn't mean the world will have less oil. This is because state-owned oil companies in the Middle East, North Africa and Latin America are taking advantage of investor-owned oil company cuts to increase their production.

This massive shift could reverse a decade-long trend of rising domestic oil and gas production that has turned the United States into a net exporter of oil, gasoline, natural gas and other petroleum products, and make America more dependent on the Organization of oil exporting countries, authoritarian leaders and politically unstable countries.

The drive by governments to increase oil and gas production means that it could take decades for global supplies of fossil fuels to decline, unless there is a sharp decline in demand for those fuels.

President Biden has actually accepted the idea that the United States will be more dependent on foreign oil, at least for the next few years. His administration has asked OPEC and its allies to increase production to help lower rising oil and gasoline prices, even as it seeks to limit the growth of oil and gas production on federal lands and waters. .

The administration's approach is a consequence of two conflicting priorities: President Biden wants the world to move away from fossil fuels while protecting Americans from soaring energy prices. In the short term, it is difficult to achieve both goals because most people cannot easily replace internal combustion engine cars, gas ovens and other fossil fuel based products with versions that run on electricity generated by wind turbines. solar panels and other renewable energy sources.

Western oil companies are also under pressure from investors and environmental activists who are calling for a quick transition to clean energy. Some US producers have said they are reluctant to invest more because they fear oil prices will fall again or because banks and investors are less willing to finance their operations. As a result, some are selling parts of their fossil fuel empires or are simply spending less on oil and gas.

This has created a great opportunity for state oil companies that are not under so much pressure to cut emissions, even though some are also investing in renewable energy. Indeed, their political masters often want these oil companies to increase production to help pay off debt, fund government programs, and create jobs.

Saudi Aramco, the world's largest oil producer, announced that it plans to increase oil production capacity by at least one million barrels per day, up to 13 million, by 2030. Aramco has increased its exploration and production investments of $ 8 billion this year, to $ 35 billion.

"We are capitalizing on the opportunity," Aramco chief executive Amin H. Nasser recently told financial analysts. "Of course we are trying to benefit from the lack of investment from the major market players."

Aramco not only has vast reserves, but it can also produce oil much cheaper than Western companies, because its crude is relatively easy to extract from the earth. So even if demand drops due to a rapid shift to electric cars and trucks, Aramco will likely be able to pump oil for years or decades longer than many Western energy companies.

"State-owned companies are going their own way," said René Ortiz, a former OPEC general secretary and former energy minister in Ecuador. "They don't care about world political pressure to control emissions."

State oil companies in Kuwait, the United Arab Emirates, Iraq, Libya, Argentina, Colombia and Brazil are also planning to increase production. If oil and natural gas prices remain high or rise further, energy experts say, other oil-producing nations will be tempted to increase supply.

The global oil market share of the 23 nations that belong to OPEC Plus, a group dominated by OPEC state oil companies and allied countries like Russia and Mexico, will grow to 75% from 55% in 2040, according to Michael. C. Lynch, president of Strategic Energy and Economic Research in Amherst, Mass, occasional adviser to OPEC.

If this prediction comes true, the United States and Europe could become more vulnerable to political turmoil in those countries and the whims of their rulers. Some European leaders and analysts have long argued that Russian President Vladimir V. Putin uses his country's vast natural gas reserves like a club – a complaint that was voiced again recently as European gas prices soared to record levels.

Other oil and gas producers such as Iraq, Libya and Nigeria are unstable, and their production can rapidly rise or fall depending on who is in power or who is trying to take it.

"By adopting the strategy of producing less oil, Western oil companies will shift control of supplies to domestic oil companies in countries that may be less reliable trading partners and have weaker environmental regulations," said Mr. Lynch.

Over-reliance on foreign oil can be problematic because it can limit the options American politicians have when energy prices rise, forcing presidents to actually plead with OPEC to produce more oil. And it gives oil-producing countries greater influence over the United States.

"Today, when American shale companies have no intention of responding to higher prices with investments for financial reasons, we are dependent on OPEC, whether it is willing to release reserve production or not," said David Goldwyn, a senior. State Department energy officer in the Obama administration. He likened the present time to that in 2000, when Energy Secretary Bill Richardson "went around the world asking OPEC countries to release reserve capacity to relieve price pressure."

This time around, state-owned energy companies aren't simply trying to produce more oil in their countries. Many are expanding overseas.

In recent months, Qatar Energy has invested in several African offshore fields, while the Romanian national gas company has bought an offshore production block from Exxon Mobil. As Western companies sell off polluting reserves like Canadian tar sands, energy experts say state-owned companies can be expected to step in.

“There is a lot of cheap fruit that state-owned companies can harvest,” said Raoul LeBlanc, an oil analyst at IHS Markit, a research and consultancy firm. "It is a huge opportunity for them to become international players."

Kuwait announced last month that it intended to invest more than $ 6 billion in exploration over the next five years to increase production to four million barrels a day, from 2.4 million today.

This month, the UAE, a major OPEC member producing four million barrels of oil per day, became the first Persian Gulf state to commit to a net zero carbon emissions target by 2050. But only last year ADNOC, the UAE's national oil company, announced it was investing $ 122 billion in new oil and gas projects.

Iraq, OPEC's second largest producer after Saudi Arabia, has invested heavily in recent years to increase oil production, aiming to increase production to eight million barrels a day by 2027, from five million today. The country suffers from political unrest, energy shortages and inadequate ports, but the government has made several major deals with foreign oil companies to help the state-owned energy company develop new fields and improve production of old ones.

Even in Libya, where warring factions have hindered the oil industry for years, production is increasing. In recent months, it has churned out 1.3 million barrels per day, a nine-year high. The government aims to increase this total to 2.5 million within six years.

National oil companies in Brazil, Colombia and Argentina are also working to produce more oil and gas to increase revenues for their governments before oil demand wanes with richer countries cutting fossil fuel use.

After years of frustrating disappointments, production at Argentina's Vaca Muerta, or Dead Cow, oil and gas field has jumped this year. The field had never supplied more than 120,000 barrels of oil per day, but is now expected to end the year at 200,000 per day, according to Rystad Energy, a research and consulting firm. The government, which is considered a climate leader in Latin America, has proposed legislation that would encourage even more production.

"Argentina is concerned about climate change, but it doesn't see it primarily as its responsibility," said Lisa Viscidi, an energy expert at Inter-American Dialogue, a Washington-based research organization. Describing the Argentine point of view, he added: "The rest of the world globally needs to reduce oil production, but this does not mean that we in particular have to change our behavior."

(Extract from the foreign press review by Epr Comunicazione)