Church abandons oil – Too early to move at full blast

This news has been read 9085 times!

IN a surprise announcement last week, the Church of England decided to let go of investments worth about $150 million in oil companies including BP and Shell, accusing them of not doing enough to tackle climate change. It will divest from companies that produce fossil fuels. It concluded that the oil companies failed to meet a certain mid-year target.

The spokesperson of the Church of England urged oil companies to take climate change into serious consideration, which would mean phasing out of the traditional oil industry and opting for alternative green and clean energy, instead of fossil fuels. The church currently has investments worth more than $11 billion. It will offl oad all of its investments in oil companies such as Shell, BP, Eni, Repsol, Total and other European groups, in addition to the ExxonMobil and Occidental Petroleum of the United States.

In the meantime, it seems that international oil companies are switching back to fossil fuels, and are claiming to maintain the larger percentage of spending on oil and gas, which is against the wish and will of climate activists. It is hard to believe that oil companies will give up their best returns of oil for a gradual shift, which in most cases is about 50 percent, to green and solar energy. It is perhaps still too early to move at full blast, even though the Church of England is in a hurry, not knowing that oil companies have to consider their owners’ and shareholders’ interests as well.

On the other hand, oil prices are still below the requested price of $80 per barrel, which is a level that is unlikely during the current period, as the main industry indicators are still not moving positively towards a higher and tighter oil supply, in the absence of any sign of stronger global demand, and with uncertainty surrounding China’s growth in any directions yet. The entry of new oils from all over is negatively impacting the crude oil production cuts of OPEC+, with the prices on the decline. The new oils that are coming from Iran and Venezuela could be bringing the prices down, which would be embarrassing for the oil organization, as it is observing the way the oil prices are not moving up despite its huge production cuts with commitments from all its members.

This, however, does not seem to be the case today, with every member seeking higher production at the current low oil prices. The market can feel a crack in the unity of OPEC+. Perhaps it could be corrected from next month with Saudi’s voluntary cut of one million barrels per day. In the meantime, oil companies have to manage the new critical force of religion, and figure out how to manage its relationship with the Church of England, after the latter diverts away from oil. To progress away from fossil fuels is not an easy task, as the oil companies would be risking its relationship with its shareholders, against the church of total $7 million in equity and debt across oil and gas companies in its common investment funds.

By Kamel Al-Harami
Independent Oil Analyst

email: [email protected]

This news has been read 9085 times!