Oil, gas companies risk losing $2tn
26 November 2015, Nirapad News: The world’s biggest oil and gas companies risk losing $2.2tn by overestimating future demand for fossil fuels, a report suggests.
By underestimating both legislation to cut the use of dirty fuels and the development of clean energy, these firms are investing in assets that may prove worthless, says Carbon Tracker.
Shell, Exxon Mobil and BP are among those most a risk, it says, reports the BBC.
The report comes on the eve of the Paris climate change summit.
‘If the industry misreads future demand by underestimating technology and policy advances, this can lead to an excess of supply and create stranded assets,’ says the report by the green think tank.
‘This is where shareholders should be concerned – if companies are committing to future production which may never generate the returns expected.’
By assuming that policies are introduced to limit global warming to 2 degrees centigrade – the internationally accepted point at which rising temperatures could have dangerous consequences for the planet – the report suggests that many of the world’s leading energy companies could lose tens of billions of dollars through unneeded expenditure.
The study says that Mexican state-owned oil company Pemex is the most at risk, to the tune of $77bn over the next 10 years. Shell ($76.9bn), Exxon Mobil ($72.9), Rosneft ($53.3bn) and BP ($45.5bn) make up the rest of the top five.