US majors caught between duelling ESG agendas
ExxonMobil and Chevron will face renewed calls to double down on climate commitments at shareholder meetings next week, just as a backlash against environmental, social and governance (ESG) pressures is building.
The pushback has been underpinned by such seemingly stalwart supporters as BlackRock, which said many shareholder proposals this year are too "prescriptive", and unexpectedly garnished by firebrands such as tech entrepreneur Elon Musk, who saw his electric vehicle (EV) maker Tesla penalised this week.
Resolutions this month urging Occidental Petroleum and ConocoPhillips to pursue more ambitious emissions-reductions plans in alignment with the Paris Agreement failed to gain much traction among shareholders. And a climate resolution at BP's annual meeting was backed by just 15pc of investors, down from the 21pc who supported a similar proposal last year.
The lack of support may reflect increasingly urgent concerns over energy security sparked by the war in Ukraine, which has pushed up fuel costs amid tight global supplies, and overshadowed climate issues for the time being. Investor criticism of the specific climate measures being promoted this year is growing.
"Our early assessment is that many of the proposals coming to a vote are more prescriptive and constraining on management than those on which we voted in the past year," BlackRock, the world's biggest asset manager, said in a recent investment stewardship update. The firm, which played an instrumental role in backing an investor revolt at ExxonMobil last year, argues that attempts to lessen reliance on Russian fuel exports are changing the dynamics of the energy transition and will drive the need for "companies that invest in both traditional and renewable sources of energy" for some time to come.
Climate measures on the ballot when the top two US producers hold their annual meetings on 25 May include calls for ExxonMobil to reduce sales of oil and natural gas and slash emissions, as well as report on its low-carbon business planning. Chevron is being pressed to report on the impact of a net zero 2050 scenario. Both boards recommend investors vote against the proposals.
A year ago, shareholder angst at the perceived lack of urgency with which ExxonMobil was treating the climate crisis sparked a rare investor revolt that unseated a quarter of its board. And a majority of votes cast at Chevron's annual meeting backed action to tackle emissions from customers. The ensuing backlash prompted both to beef up their climate commitments, with expanded targets to curb emissions and pledges to invest billions of dollars in low-carbon technologies such as carbon capture and hydrogen in coming years. While both moves were far beyond what might have been expected of the firms just a few years ago, the measures were dismissed by the green lobby as being insufficient, especially compared with more transformative efforts undertaken by their European peers.
Musk smells a rat
The annual meetings come as ESG issues are drawing increased scrutiny at the federal and state level. Proposed rules at the US Securities and Exchange Commission — calling on companies to disclose their emissions and assess future risks from climate change in financial statements — are also being contested in Washington. Former vice-president Mike Pence railed against what he called "capricious" ESG regulations that are choking off financing for fossil fuels, as well as activist investors who are pushing "left-wing" causes. And Tesla's Musk last week lashed out at ESG principles after the EV manufacturer was booted from a top benchmark that tracks sustainable companies, while ExxonMobil made the list. "ESG is a scam," he wrote on Twitter. "It has been weaponised by phony social justice warriors."
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Abu Dhabi’s Adnoc puts crude capacity at 4.85mn b/d
Abu Dhabi’s Adnoc puts crude capacity at 4.85mn b/d
Dubai, 2 May (Argus) — Abu Dhabi's state-owned Adnoc has nudged up its self-reported crude production capacity to 4.85mn b/d, from 4.65mn b/d previously. The UAE state energy giant did not formally announce the increase but updated the figure on its website. It did something similar when its capacity reached 4.65mn b/d in late 2023, up from 4.5mn b/d in the middle of last year. This latest hike takes the company a step closer to its long-term 5mn b/d crude capacity target, which it aims to reach by 2027. Adnoc set the 5mn b/d target back in 2018 when its capacity was 3.5mn b/d. At that time, the company said it was aiming to deliver the increase by 2030, but in November 2022 it brought the timeframe forward by three years, citing the "UAE's robust hydrocarbon reserves". The change in timeline had been expected, with sources telling Argus earlier that year that discussions had been taking place in the upper echelons of Adnoc about significantly accelerating its capacity growth plans . Given the speed at which the company has been delivering capacity gains over the past few years, and how close it is to meeting its target already, it is not inconceivable that Adnoc will reach 5mn b/d ahead of schedule. Put your best foot forward The UAE's rising capacity comes as Opec+ producers engage with independent agencies to update their respective crude output capacities for use in production policy decisions from 2025. At their meeting in June last year, all Opec+ members committed to undergo an external assessment of their sustainable capacities in the first half of 2024 by three independent consultancies, IHS, Wood Mackenzie and Rystad. The updated capacity assessment will help address a key criticism of the Opec+ production restraint agreements in their current format, namely that many of the countries involved have been cutting output from a baseline level of production that they can no longer actually deliver, in most cases due to natural decline. The UAE has been one of a handful of countries in the group that has been raising its capacity over the past few years. This means it should, in theory, benefit from the latest assessment, as a higher accepted capacity will afford it a higher production baseline under any Opec+ agreements struck from 2025 onwards. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Shell's 1Q profit supported by LNG and refining
Shell's 1Q profit supported by LNG and refining
London, 2 May (Argus) — Shell delivered a better-than-expected profit for the first quarter of 2024, helped by a strong performance from its LNG and oil product businesses. The company reported profit of $7.4bn for January-March, up sharply from an impairment-hit $474mn in the previous three months but down from $8.7bn in the first quarter of 2023. Adjusted for inventory valuation effects and one-off items, Shell's profit came in at $7.7bn, 6pc ahead of the preceding three months and above analysts' estimates of $6.3bn-$6.5bn, although it was 20pc lower than the first quarter of 2023 when gas prices were higher. Shell's oil and gas production increased by 3pc on the quarter in January-March and was broadly flat compared with a year earlier at 2.91mn b/d of oil equivalent (boe/d). For the current quarter, Shell expects production in a range of 2.55mn-2.81mn boe/d, reflecting the effect of scheduled maintenance across its portfolio. The company's Integrated Gas segment delivered a profit of $2.76bn in the first quarter, up from $1.73bn in the previous three months and $2.41bn a year earlier. The segment benefited from increased LNG volumes — 7.58mn t compared to 7.06mn t in the previous quarter and 7.19mn t a year earlier — as well as favourable deferred tax movements and lower operating expenses. For the current quarter, Shell expects to produce 6.8mn-7.4mn t of LNG. In the downstream, the company's Chemicals and Products segment swung to a profit of $1.16bn during the quarter from an impairment-driven loss of $1.83bn in the previous three months, supported by a strong contribution from oil trading operations and higher refining margins driven by greater utilisation of its refineries and global supply disruptions. Shell's refinery throughput increased to 1.43mn b/d in the first quarter from 1.32mn b/d in fourth quarter of last year and 1.41mn b/d in January-March 2023. Shell has maintained its quarterly dividend at $0.344/share. It also said it has completed the $3.5bn programme of share repurchases that it announced at its previous set of results and plans to buy back another $3.5bn of its shares before the company's next quarterly results announcement. The company said it expects its capital spending for the year to be within a $22bn-$25bn range. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Fed signals rates likely to stay high for longer
US Fed signals rates likely to stay high for longer
Houston, 1 May (Argus) — Federal Reserve policymakers signaled they are likely to hold rates higher for longer until they are confident inflation is slowing "sustainably" towards the 2pc target. The Federal Open Market Committee (FOMC) held the federal funds target rate unchanged at a 23-year high of 5.25-5.5pc, for the sixth consecutive meeting. This followed 11 rate increases from March 2022 through July 2023 that amounted to the most aggressive hiking campaign in four decades. "We don't think it would be appropriate to dial back our restrictive policy stance until we've gained greater confidence that inflation is moving down sustainably," Fed chair Jerome Powell told a press conference after the meeting. "It appears it'll take longer to reach the point of confidence that rate cuts will be in scope." In a statement the FOMC cited a lack of further progress towards the committee's 2pc inflation objective in recent months as part of the decision to hold the rate steady. Despite this, the FOMC said the risks to achieving its employment and inflation goals "have moved toward better balance over the past year," shifting prior language that said the goals "are moving into better balance." The decision to keep rates steady was widely expected. CME's FedWatch tool, which tracks fed funds futures trading, had assigned a 99pc probability to the Fed holding rates steady today while giving 58pc odds of rate declines beginning at the 7 November meeting. In March, Fed policymakers had signaled they believed three quarter points cuts were likely this year. Inflation has ticked up lately after falling from four-decade highs in mid-2022. The consumer price index inched back up to an annual 3.5pc in March after reaching a recent low of 3pc in June 2023. The employment cost index edged up in the first quarter to the highest in a year. At the same time, job growth, wages and demand have remained resilient. The Fed also said it would begin slowing the pace of reducing its balance sheet of Treasuries and other notes in June, partly to avoid stress in money markets. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
FERC OK’s Virginia Transco gasline expansion
FERC OK’s Virginia Transco gasline expansion
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