Two U.S. energy giants, ExxonMobil and Chevron, have disclosed their capital investment expectations, encompassing oil and gas plays, which go shoulder to shoulder with emission-reduction solutions, as these oil majors are no strangers to the uncertainly that surrounds the energy transition and low-carbon landscape. As a result, they are taking a shot at chasing more hydrocarbons alongside decarbonization.
While climate action heats up at COP28, many new decarbonization efforts are springing up to slash emissions from the energy sector, with recent signs indicating that the final text of the climate talks is heading towards a showdown on the question of phasing out fossil fuels. There is no doubt that throwing a commitment to exit the fossil fuels age into the final agreement at COP28 is no small feat, especially in the light of Sultan Al-Jaber’s remarks that limiting warming to 1.5°C does not necessarily require phasing out fossil fuels.
While some may not be on the same page as the COP28 President when it comes to fossil energy, as they do not think that ending oil, gas, and coal production would send humanity back to the Stone Age, the energy crisis has pushed countries into putting all energy sources at their disposal to good use to avoid a new supply crunch down the road.
Well-versed in the nuances of the current energy ecosystem, ExxonMobil’s Chairman and CEO, Darren Woods, said at the APEC Summit in San Francisco last month that the plan to tackle climate change and energy demands would need to go beyond expanding wind, solar, and EVs. According to ExxonMobil’s CEO, the world needs to commit to solving its “energy and emissions challenges simultaneously” to bridge the global North-South divide.
Woods also stated that the problem was not oil and gas but emissions, echoing Kevin Gallagher, Santos’ Managing Director and Chief Executive Officer, who underscored that “the climate enemy is emissions, not fossil fuels” while addressing a WA Energy Club luncheon in Perth, Western Australia.
Based on ExxonMobil’s updated corporate plan through 2027, the company is intent on continuing the execution of its strategy to provide the energy products the world needs and to lower not just its own emissions but also those of others. The U.S. player highlights that the execution of its strategy has increased the earnings power of the corporation, adding about $10 billion to its annual earnings and cash flow at a real Brent price of $60 per barrel since 2019.
For the oil major, these improvements provide “a strong foundation” to further grow annual earnings and cash flow by $14 billion from year-end 2023 through 2027, as it continues to reduce structural costs and improve the mix of its business by growing production from low-cost-of-supply, advantaged assets and increasing sales of high-value performance chemicals, lower-emission fuels, and performance lubricants.
“By any measure, our plans have and will continue to deliver exceptional value. We remain committed to providing the energy and products that raise living standards around the world while building a new business to reduce emissions in hard-to-decarbonize parts of the economy. ExxonMobil is uniquely equipped to do both, and we’re confident that both present significant opportunities for profitable growth,” underlined Woods.
ExxonMobil plans to deliver $6 billion in additional structural cost reductions by year-end 2027, bringing the total structural cost savings to approximately $15 billion versus 2019, while Upstream earnings potential is on track to more than double by 2027 versus 2019, resulting from investments in high-return, low-cost-of-supply projects. Over the next five years, approximately 90% of the firm’s planned Upstream capital investments in new oil and flowing gas production are expected to generate returns greater than 10% at a Brent price of $35/bbl.
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