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* Carbon Tracker says 18 new projects "deep out of the
money"
* Companies risk "wasting" $2.2 trillion by 2030
* Oil majors say investment needed to meet Asian demand
(Adds Chevron comment)
By Ron Bousso
LONDON, Sept 6 (Reuters) - Major oil companies have approved
$50 billion of projects since last year that will not be
economically viable if governments implement the Paris Agreement
on climate change, think-tank Carbon Tracker said in a report
published on Friday.
The analysis found that investment plans by Royal Dutch
Shell, BP and ExxonMobil among other
companies will not be compatible with the 2015 Paris Agreement,
which aims to limit global warming to 1.5 degrees Celsius.
"Every oil major is betting heavily against a 1.5 degree
Celsius world and investing in projects that are contrary to the
Paris goals," said report co-author Andrew Grant, a former
natural resources analyst at Barclays.
Big oil and gas companies have welcomed the U.N.-backed
Paris Agreement, in which governments agreed to curb greenhouse
gas emissions enough to limit global warming to 1.5 degrees
Celsius, or "well below" 2 degrees Celsius by the end of the
century.
Scientists view 1.5 degrees Celsius as a tipping point where
climate impacts such as sea-level rise, natural disasters,
forced migration, failed harvests and deadly heatwaves will
rapidly start to intensify if it is breached.
Carbon Tracker's analysis, co-authored by Mike Coffin, a
former geologist at BP, found that 18 newly approved oil and gas
projects worth $50 billion could be left "deep out of the money"
in a lower carbon world.
The projects include Shell's $13 billion liquefied natural
gas (LNG) Canada LNG project, a $4.3 billion oilfield expansion
project in Azerbaijan owned by BP, Exxon, Chevron and
Equinor, and a $1.3 billion deepwater project in
Angola operated by BP, Exxon, Chevron, Total and
Equinor.
The report also concluded that oil and gas companies risk
"wasting" $2.2 trillion by 2030 on new projects if governments
apply stricter curbs on greenhouse gas emissions.
Previous reports on the implications of climate change for
oil and gas companies by Carbon Tracker and other researchers
have contributed to a wave of investor pressure on majors to
show that their investments are aligned with the Paris goals.
While some companies including Shell, BP, Total and Equinor
have increased spending on renewable energy and introduced
carbon reduction targets, the sector says it needs to continue
investing in new projects to meet future demand for oil and gas
as Asian economies expand.
Shell said in a statement that it has set out an "ambition"
to halve net carbon emissions by 2050 "in step with society as
it moves towards meeting the aims of Paris."
"As the energy system evolves, so is our business, to
provide the mix of products that our customers need," Shell
said.
BP said its strategy to produce low cost and low carbon oil
and gas was in line with the International Energy Agency
(IEA)forecasts and the Paris agreement.
"All of this is aimed at evolving BP from an oil and gas
focused company to a much broader energy company so that we are
best equipped to help the world get to net zero while meeting
rising energy demand," the company said in a statement.
Chevron said in a statement that while it was tracking
policy changes around climate, "most outlooks we track conclude
that oil and gas demand will continue to grow over the coming
decades."
Exxon, Equinor and Total did not reply to requests for
comment.
Nevertheless, the latest Carbon Tracker report said the big
oil and gas companies spent at least 30% of their investment
last year on projects that are inconsistent with the path to
limit global warming to even 1.6 degrees Celsius.
"These projects represent an imminent challenge for
investors and companies looking to align with climate goals,"
the report warned.
Carbon Tracker's calculations were based on three scenarios
produced by the Paris-based IEA models of oil and gas supply
under different warming pathways.
With fossil fuel supply on course to outstrip demand if the
world is to limit warming at 1.5 degrees Celsius, the report
assumed that the projects with the lowest production costs would
be the most competitive.
"Demand for oil can be satisfied with projects that break
even at below $40 per barrel and pursuing higher-cost projects
risks creating stranded assets that will never deliver adequate
returns," the report said.
Benchmark crude futures were trading at around $62 per
barrel on Thursday.
(Reporting by Ron Bousso, additional reporting by Jennifer
Hiller in Houston; Editing by Susan Fenton and Louise Heavens)
