The board of Exxon Mobil Corp. may abandon some of its largest oil and gas projects including the $30 billion Liquefied Natural Gas (LNG) project in Mozambique, according to the WSJ. The publication also reports that another multibillion-dollar gas project in Vietnam may not go forward.
The board, which includes three new directors and appointed in May by Engine No.1 two other new members, expressed their concern about these two projects.
Since the appointment of the new Exxnon Mobil management there has been a lack of attention to climate concerns. Fossil fuel companies must be more cost conscious and green energy friendly.
The world is facing an energy crisis that accelerates the production of fossil fuels - oil and gas prices are at multi-year highs. Until there are sufficient reserves it will take a long time, and even longer to see the profits from these investments. In the opposite direction there is an investor campaign for these companies to reduce their carbon footprint. Here is the dilemma.
Exxon spent $2.8 billion to acquire a stake in the Rovuma project, but delayed a DFI for several years.
Exploration projects in Mozambique and Vietnam are stalled due to conflicts in the exploration zones. And on them there has not yet been a Final Investment Decision.
The discussions are taking place as part of a review of the oil company's five-year spending plan, on which the board is expected to vote later this month
As part of the review, Exxon is looking at the expected carbon emissions from each project and how these would affect the company's ability to meet emission reduction requirements. And according to a pre-pandemic internal Exxon analysis, the expected annual emissions from the Mozambique and Vietnam projects were among the highest of Exxon's oil and gas pipeline projects. The WSJ reports that this projection is old and does not include emissions reduction targets.
Exxon spent $2.8 billion to acquire a stake in the Rovuma project, but delayed a DFI for several years. The oil company did not reveal an exact estimate of the project's cost, but Mozambique estimated it at between $27 billion and $33 billion.
In Vietnam, Exxon and its partners discovered a large gas field in 2011 in waters 50 miles offshore, but have not yet developed it. Vietnamese officials said the project would generate $20 billion in government revenue.
Exxon may declare in the coming weeks the increase of its investment in a low-carbon unit by billions of dollars. Initially it was three billion dollars.