Oil explorers like Exxon Mobil Corp. and OAO Rosneft risk
wasting $1.1 trillion of investors’ cash through 2025 on expensive, uneconomic
projects from the Arctic and deep seas to tar sands, according to a study.
That’s the sum the industry may spend on developments that
need market prices of at least $95 a barrel to break even, the Carbon Tracker
Initiative said. The money risks being wasted as the total amount of oil the
world can afford to burn without warming the planet to unsafe levels is
available from less costly deposits that are economical at $75 a barrel,
according to its report.
Petroleo Brasileiro SA’s capital spending on projects
needing $95 a barrel or more may reach $83 billion through 2025, with Exxon at
$73 billion and Rosneft at $70 billion, Carbon Tracker said. The figures aren’t
the companies’ own figures but were estimated by the non-profit group, whose
backers include the Rockefeller Brothers Fund, Joseph Rowntree Charitable Trust
and European Climate Foundation.
Rosneft said consumption of so-called unconventional oil is
forecast to rise as demand for energy increases and other sources are depleted.
While recovery is a challenge, the resources represent the foundation for a
“stable increase in company value for shareholders,” it said in an e-mailed
reply to questions.
Scott Silvestri, a spokesman for Exxon, declined to comment
beyond saying that the company’s average per-unit production cost in 2013 was
$11.48 across its entire portfolio.
Petrobras wasn’t immediately able to comment when contacted
for reaction to the Carbon Tracker report.
The non-profit group said smaller companies have the bulk of
the exposure as they tend to specialize in unconventional oil.
“Investors should require the majors to demonstrate improved
capital discipline, to deliver shareholder value, not just volume of
production,” James Leaton, research director at Carbon Tracker, said by e-mail.
“The oil majors will set the tone. If they move away from high-cost projects,
then the market needs to question providing capital to other smaller players.”
World governments aim to devise by the end of next year an
agreement to ensure the global average temperature rise since industrialization
began is capped at 2 degrees Celsius (3.6 degrees Fahrenheit). That would
entail a maximum of a further 900 gigatons of carbon-dioxide emissions, of
which 360 gigatons could come from burning oil, according to Carbon Tracker.
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