Un­der­in­vest­ment poses greater sys­temic risk than over­in­vest­ment, says BP’s Dud­ley

The Daily Telegraph - Business - - Business - By Jil­lian Am­brose

BP CHIEF ex­ec­u­tive Bob Dud­ley has branded fears that the oil in­dus­try’s $1 tril­lion in­vest­ments in oil and gas could be left stranded by a shift to low­car­bon en­ergy as mis­guided.

The oil boss said cam­paign­ers call­ing for fi­nan­cial in­sti­tu­tions to di­vest from oil and gas com­pa­nies to avoid so-called “stranded as­sets” are un­der­es­ti­mat­ing the flex­i­bil­ity of oil com­pa­nies.

The largest ma­jors in­vest $100bn (£76bn) in fos­sil fuel projects ev­ery year, but could still adapt to a low-car­bon world “in time” by re­shap­ing their busi­nesses “within a decade” and re­main­ing fi­nan­cially re­silient, he said.

“They are driven by good in­ten­tions, but my con­cern is that their sug­gested rec­om­men­da­tions could lead to bad out­comes, par­tic­u­larly for some of the most vul­ner­a­ble peo­ple in the world,” he told a Lon­don con­fer­ence. “The first prob­lem is it ig­nores the con­tin­u­ing con­tri­bu­tion needed from oil and gas in this low-car­bon en­ergy tran­si­tion,” he said. “I be­lieve the more se­ri­ous sys­temic risk comes from un­der­in­vest­ment in oil and gas ex­plo­ration and pro­duc­tion – not over­in­vest­ment,” he added.

Al­though re­new­able en­ergy is grow­ing faster than any other en­ergy source in his­tory, fos­sil fu­els will still meet the ma­jor­ity of the world’s en­ergy de­mand by 2040 and can still be con­sis­tent with cli­mate change tar­gets, he said. Of­fi­cial fore­casts es­ti­mate re­new­able en­ergy, such as wind and so­lar power, could meet around a third of the world’s en­ergy de­mand in the com­ing decades.

“But we still need to meet the re­main­ing two thirds of de­mand – and oil and gas have a cru­cial role to play. They can do that and be con­sis­tent with the Paris goals – so long as car­bon cap­ture us­age and stor­age is de­ployed widely, es­pe­cially in the power sec­tor,” he added.

Sep­a­rately yes­ter­day, Royal Dutch Shell an­nounced it has re­turned to the North Sea with its fourth in­vest­ment this year to de­velop the Ar­ran gas field, 149 miles east of Aberdeen.

The An­glo-Dutch en­ergy gi­ant sold off around £2.4bn worth of North Sea fields and as­sets in early 2017, but is mak­ing a se­ries of care­ful new in­vest­ments in the basin.

Bob Dud­ley said the largest ma­jors could still adapt to a low-car­bon world ‘in time’ by re­shap­ing ‘within a decade’

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