Aramco and other oil giants set first joint carbon target

The joint target reflects the pressure on the sector’s climate stance. (AFP)
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Updated 17 July 2020

Aramco and other oil giants set first joint carbon target

  • The decision marks a change of heart by the US oil company Exxon, which did not report its carbon emissions in 2019

LONDON: A group of the world’s top oil companies including Saudi Aramco, China’s CNPC and Exxon Mobil have for the first time set joint targets to cut their combined greenhouse gas emissions as a proportion of production, as pressure on the sector’s climate stance grows.

However, the target set by the 12 members of the Oil and Gas Climate Initiative (OGCI) is eclipsed by more ambitious plans set individually by the consortium’s European members, including Royal Dutch Shell, BP and Total.

The OGCI members agreed to reduce the average carbon intensity of their aggregated upstream oil and gas operations to between 20 kg and 21 kg of CO2 equivalent per barrel of oil equivalent (CO2e/boe) by 2025, from a collective baseline of 23 kg CO2e/boe in 2017, the OGCI said in a statement.

Intensity targets mean absolute emissions can rise with increasing production.

The OGCI’s members are BP, Chevron, CNPC, Eni, Equinor, Exxon, Occidental Petroleum, Petrobras, Repsol, Saudi Aramco, Shell and Total.

Together they account for more than 30 percent of the world’s oil and gas production.

“It is a significant milestone, it is not the end of the work, it is a near term target ... and we’ll keep calibrating as we go forward,” OGCI Chairman and former BP CEO Bob Dudley told Reuters.

The members agreed on a common methodology to calculate carbon intensity and the targets could be extended to other sectors such as liquefied natural gas and refining in the future, Dudley added.

The announcement marks an important change for Exxon, the largest US oil company, which has resisted investor pressure to improve the disclosure of its impact on the environment. It did not report its carbon emissions in 2019.

Exxon supports the OGCI targets to decrease the carbon intensity of energy production and is “part of the industry’s efforts to take practical, meaningful steps to reduce emissions,” a spokesman said.

The targets set by different companies can vary widely in scope and definition, making it difficult to compare. However, some members of the OGCI already exceed or plan to overshoot the joint target.

For example, Saudi Aramco, the world’s top oil exporter, had an upstream carbon intensity of 10.1kg CO2e/boe in 2019, according to its annual report.

Norway’s Equinor aims to reduce its CO2 intensity below 8kg/boe by 2025. It has said the current global industry average is 18 kg CO2e/boe.

OGCI said the group’s collective carbon intensity would be reported annually, with data reviewed by EY, as an independent third party.

The target includes reductions in methane emissions, a potent greenhouse gas, which the group had previously committed to cut.


Iraq pledges full compliance with OPEC+ oil cuts

Updated 08 August 2020

Iraq pledges full compliance with OPEC+ oil cuts

  • Prince Abdulaziz bin Salman Al-Saud, the Saudi Arabian energy minister, and his Iraqi counterpart, Ihsan Ismail, reaffirmed their commitment to the cuts
  • Under tough economic pressure, Iraq had struggled to meet the full cuts, but Ismail promised to reach 100 percent this month

DUBAI: Iraq has pledged to meet in full its obligations under the OPEC+ oil production cuts that have been credited with rebalancing global crude markets after the mayhem of April’s “Black Monday” when prices crashed around the world.

In a telephone call between Prince Abdulaziz bin Salman Al-Saud, Saudi Arabian energy minister, and his Iraqi counterpart, Ihsan Ismail, the two men reaffirmed their commitment to the cuts, which have helped to pull the oil price back from historic lows.

Brent crude, the global benchmark, has more than doubled in the past three months.

Under tough economic pressure, Iraq had struggled to meet the full cuts, but Ismail promised to reach 100 percent this month. Iraq has now committed itself to an ambitious program of compensation to make up for past overproduction.

Iraq will further reduce production by 400,000 barrels per day this month and next, Ismail said, bringing its total cut to 1.25 million barrels daily. That level of cuts could be adjusted when final estimates of compliance are assessed by the six “secondary sources” that monitor OPEC+ output.

“The two ministers stressed that efforts by OPEC+ countries toward meeting production cuts, and the extra cuts under the compensation regime, will enhance oil market stability, help accelerate the rebalancing of global oil markets, and send a constructive signal to the market,” a joint statement added.

Prince Abdulaziz thanked Ismail for his efforts to improve Iraq’s compliance with the agreement.

Iraq had been the biggest laggard in the move toward 100 percent compliance by the 23 members of the OPEC+ alliance.

Officials in Riyadh told Arab News that Iraqi compliance had reached about 90 percent, a high level by the country’s previous standards but still short of the new targets.

Saudi Arabia has been forcefully advocating full compliance with the targets in an effort to remove oil from the global market as demand is still badly affected by the economic fallout from the COVID-19 pandemic.

The oil market will be under the spotlight later this month when the joint ministerial monitoring committee of OPEC+ energy ministers convenes virtually in the most recent of the monthly meetings set up to oversee the state of the global industry.

Oil had another strong week on global markets, breaking through the $45 barrier for the first time since early March on signs that the glut in US oil stocks was easing, as well as reductions in the amount of “floating crude” stored in tankers on the world’s oceans.

The price spiked on news of the Beirut explosion, which some analysts believed could herald a deterioration in regional security and a threat to oil exports.

Brent crude was trading at $44.70 on international markets.