BP launched a broadside against those calling for investors to sell out of oil and gas companies and warned this approach threatened energy security and the global economy.
Bob Dudley, CEO, said on Oct. 10 that, despite the transition towards a low carbon world, oil and gas will be crucial for meeting future energy demand.
“Renewables are growing at a remarkable rate,” said Dudley, saying they could supply about a third of the energy mix by around 2040. “But we still need to meet the remaining two-thirds of demand.”
The campaign for divestment, to “squeeze” oil and gas out of the fuel mix, was a misguided attempt to “drive a wedge between the energy industry and investors”.
Climate-focused groups and even the Bank of England governor Mark Carney have warned of the risks posed by global warming for investor returns and financial stability.
Trillions of dollars spent on oil and gas projects could become uneconomic if global carbon-reduction targets are met and advances in clean technology take place, they have said.
While divestment campaigners might be “driven by good intentions,” their suggested recommendations could lead to “bad outcomes,” Dudley said.
A move to tackle emissions was not adequately addressing the other half of what Mr Dudley calls the “dual challenge” facing the energy sector—ensuring enough energy supplies for the world.
“Many trillions of dollars of investment in oil and gas will still be required to counter the substantial decline rates of existing fields,” Dudley said.
The majors are under pressure from shareholders and activists, not only to improve their carbon footprints, but also to prove their businesses are sustainable in the decades to come.
Dudley said that BP’s portfolio of assets had enough “flexibility and resilience” to enable the company to adapt to which ever direction the energy transition takes.
Speaking at the Oil & Money Conference in London, Dudley said that, while groups have spoken about the financial risks of “stranded assets,” the systemic risk comes from under-investment.
“Suppose $2 trillion less were invested than actually required to meet demand. The impact of such under-investment on financial stability could be much more far-reaching,” Dudley said.
Dudley also hit out at activists who have demanded disclosures on the precise potential financial impacts on BP’s business, saying it would only expose the energy group to arbitrary targets and legal challenges.
“While you may get precise results, they will almost certainly be inaccurate— just plain wrong—and actually confuse investors about the future. Not to mention, impair our ability to adjust to it.”
Additional reporting by David Sheppard
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