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Oil bosses break long climate silence with urgent initiative

Fri, 12th Jun 2015 14:32

* Energy firms accelerate activity ahead of Paris summit

* Need for joint action first touted in Davos in January

By Ron Bousso and Dmitry Zhdannikov

LONDON, June 12 (Reuters) - For an industry used tocautious, long-term evolution, the speed at which leaders ofEurope's biggest oil and gas companies moved to take a jointstand in the climate debate speaks volumes.

Discrete talks in the eyrie of Davos in January led to aspontaneous, light bulb moment on a stage in Oslo in February.The result: a joint statement two months later. The executivesagreed they had to go public, and with alacrity.

Faced with growing pressure from shareholders, vocaldivestment campaigns by the media and advocacy groups, therelooms the critical moment of the United Nations climate summitin Paris in December. The industry campaign will speed up beforethen.

"In the past we thought it was better to keep a low profileon the issue. I understand that tactic, but in the end it's nota good tactic," Shell CEO Ben van Beurden told his peers in aspeech at a black-tie dinner in London in February.

The first signs of a change in tack came in high-level talksbetween industry executives during the World Economic Forum inthe Swiss resort of Davos.

"Climate change has risen significantly as a priority in theagenda of the Oil and Gas industry," according to previouslyunpublished official notes from the governors meeting for oiland gas industries held there.

During a dinner entitled "The Energy-Climate Nexus",executives discussed the need for "long-term planning on climateaction needs to be complemented with 5, 10 and 20 year horizonplanning."

They identified the need to "catalyse a broad businesscoalition from all sectors towards concrete delivery of climatesolutions."

Importantly, the notes added that "there is strong interest(yet not unanimous) in favour of a carbon pricing system" aimedat curbing the burning of the most polluting fossil fuels,mostly coal.

The defining moment came in May when chief executives of BGGroup, BP, Eni, Royal Dutch Shell, Statoil and France's Total drafteda letter urging governments around the world to introduce apricing system for carbon emissions in order to battle theirharmful effect.

The wording of the letter, an unprecedented joint initiativeby European rivals, was discussed discreetly and directly at thehighest level.

Until the very last days before its release, few advisorsand press officers had any inkling of its existence, accordingto company sources.

ON STAGE

A spur-of-the-moment thought gave it conception. It cameduring a questions and answers session with the chief executivesof BP, Shell, Total and Statoil during the Oslo Energy Forum onFeb. 19.

"We were on stage in a panel at an Oslo energy forum and wewere pressed by people in the panel to talk about our views onclimate and what our positions were," BP CEO Bob Dudley toldreporters this week. "On stage, Ben (van Beurden, Shell CEO),Patrick (Pouyanne, Total CEO), Eldar (Saetre, Statoil CEO) and Isaid we should speak with a common voice - why don't we dothat?"

"It came about as simple as that."

The CEOs of Eni and BG joined the initiative in the weeksthat followed. The bosses of ExxonMobil and Chevron opted not to join the initiative, much to the ire oftheir European counterparts.

Climate advocacy groups welcomed the initiative by the sixcompanies for raising the issue of carbon pricing, but also withscepticism from environmental experts who doubt the oilcompanies' intentions. [ID: nL5N0YO335]

The industry also held high-level talks in Paris late in Mayat the first meeting of the U.N.-backed Oil and Gas ClimateInitiative (OGCI) that included members of the national oilcompanies of Saudi Arabia, China and Mexico.

The forum is planned to publish a report ahead of the climate summit in Paris in December which will "highlightpractical actions taken by OGCI member companies to improvegreenhouse gas emissions management and to transition to lowercarbon energy in the longer term."

BP's Dudley said that the increased activity over climatewas aimed at highlighting the industry's position. he said this week.

"We will continue to work more, we'll crystallize ourthoughts because we just pulled ourselves together in the lastthree months," he said. "Between now and December, we will beperiodically putting out some position papers with morespecificity which hopefully could be practically used by thepolicy makers."

"It is not a PR stunt," Dudley said. (Additional reporting by Nina Chestney, editing by WilliamHardy)

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