Exxon to consider abandoning its biggest oil projects, despite high prices

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ExxonMobil

One of the world’s largest oil and gas companies is considering giving up on some of its largest projects. Exxon Mobil (NYSE: XOM) said that its new board of directors is debating whether to continue several big oil and gas projects. The board, which includes three new directors nominated by an activist investor, is now expressing concerns about these new developments. The biggest of which includes the $30 billion gas project in Mozambique, as well as a few other billion-dollar projects in Vietnam.

That might seem like a strange decision right now, with oil prices expected to rise in the coming months. However, these are new projects in development, which will take years before they start producing new output. That’s why Exxon is debating whether that’s worth it right now and whether prices are going to last long enough for these big investments to pay off.

In addition, the projects in question also face political pressures, as well as environmental considerations. Exxon has already pledged to meet its expected carbon emission goals. These projects in Mozambique and Vietnam are two of the largest carbon emissions in the coming pipeline for the company.

The board refused to comment when asked for comment. “Any depiction of the board’s discussions as being less than constructive in tone or substance is wrong,” said Exxon spokesman Casey Norton in a statement.

Despite the fact that oil prices are trading at a hefty $83 per barrel, pressure is mounting on top energy companies to face issues surrounding carbon neutrality and sustainability. A few big names have already promised to be carbon neutral by 2050, but whether that’ll happen or not is far from certain.

Engine No. 1, the activist hedge fund that managed to replace three board members earlier in 2021, has argued that Exxon hasn’t done enough in terms of environmental policies. The fund said that Exxon had focused too much on low-return projects that produced too many emissions. Engine No. 1 also managed to win support from other big institutional Exxon shareholders, such as Blackrock and Vanguard group.

Shares of Exxon Mobil didn’t move much in response to the news. However, since the year began, Exxon has shot up over 53.9%. No one could have predicted oil prices would rise so much over the past several months. The real question for oil companies is how long these high prices will last. We’ve seen prices hover around $120 for around three years between 2011-2014, so its possible things will stay as they are for a while longer yet. The general consensus is that we might hit $100 per barrel this winter, before prices ease up in the Spring time.

Exxon Mobile Company Profile

ExxonMobil is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2020, it produced 2.3 million barrels of liquids and 8.5 billion cubic feet of natural gas per day. At the end of 2019, reserves were 15.2 billion barrels of oil equivalent, 58% of which were liquids. The company is the world’s largest refiner with a total global refining capacity of 4.8 million barrels of oil per day and one of the world’s largest manufacturers of commodity and specialty chemicals. – Warrior Trading News

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