Big Oil to take centerstage at Houston meet as markets, alliances shift

By Liz Hampton

HOUSTON (Reuters). Houston will host energy officials and officials representing all parts of the world next week. The political fallout of Russia’s invasion in Ukraine a decade ago continues disrupting global oil supply lines. Governments must also consider long-term security of energy supplies.

Ministers and heads of oil companies will argue for investment in all forms, both fossil and renewable, in order to meet growing demands and accelerate the transition to a low carbon future industry.

CERAWeek’s discussion on fossil fuels, clean energy storage and advanced energy storage attracted a record number of participants.

The conflict in Ukraine led to record profits and a rise in crude oil prices. This led to the U.S. government accusing Big Oil and other governments, as well as Britain and other countries imposing windfall taxes on energy businesses.

Big Oil executives will continue to fight with U.S. government officials just like last year. The U.S. government, along with other Western governments, continues to call for more oil companies to pump. But, oil company executives believe they have an obligation to their shareholders and maximize the returns from investments in an industry with uncertain long term prospects.

This year’s presenters also highlight ongoing disputes between the Organization of the Petroleum Exporting Countries, Europe and the United States. These have led to some visible vacancies.

Shell’s Chief Executive Wael Sawan has been named by Shell. He joins Bernard Looney, Exxon Mobil Corp.’s Darren Woods and Chevron’s Michael Wirth, TotalEnergies’ Patrick Pouyanne, in prominent positions.

Dan Yergin is the Pulitzer Prize-winning author who was also vice-chair of S&P Global’s conference organiser S&P Global. He stated in an interview that “we will get a feel of how companies have changed their strategies by the events of this year.”

Stephen Scherr, Hertz’s CEO of car-rental, will join Looney of BP. He is a champion of the energy transition and plans for tens of thousands of electric vehicles from General Motors, Polestar and Tesla.

EY America’s oil & Gas leader Pat Jelinek stated the industry is in support of ESG and the energy transition. There is however recognition that hydrocarbons are essential for energy security and reliability.

WHERE IS OPEC AND SHALE?

Oil ministers from Latin America, Asia, and Africa will be speaking. They are responsible to balance the risks of climate changes and ensure energy security. Russia is absent, despite having sent an energy minister to the event and fewer OPEC members.

The oil ministers from Kuwait, Iraq, and Saudi Arabia were absent. After OPEC cut its production by 2 million barrels per day (bpd) last November, the U.S. was embroiled in a bitter dispute. Midterm elections were contested by President Joe Biden, and high gasoline prices nearly cost him his majority.

Top shale executives will also get less attention. Biden’s administration also opposed the U.S. shale because of drilling restrictions and lower investment in new production. Global markets are less dependent on shale and tensions between OPEC and OPEC (shale), have decreased.

Last year, Hess Corp. EQT Corp., Pioneer Natural Resources executives dined with Mohammad Barkindo (the late Secretary-General of OPEC). Barkindo received a gift from the “Genuine Barnett Shale,” An oilfield that inspired the shale revolution.

U.S. Shale was also overshadowed recently by Big Oil. Companies struggle with slow gains, tight-fisted shareholders, and U.S. Shale is no exception. The U.S.’s total oil production will increase slightly to 600,000. Comparable to an increase of around 2 million bpd for 2018.

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ENERGY INSTINCTIVITY

The geopolitical conflict continues in other places. Next week’s meetup will focus on technological innovation in oil and liquefied natural gas (LNG), electric energy, hydrogen, carbon capture, and other areas.

“There has never been such a strong focus on innovation in technologies across the energy industry,” Yergin from S&P.

This year, participation is expected to rise by 60% to 225. Biden’s Inflation Reduction Act, which offers tax credits and incentives for low-carbon energy technology and clean energy, was a major boost to many of these start-ups.

According to S&P Global, Jennifer Granholm (U.S Energy Secretary) and John Podesta White House Clean Energy Advisor (Inflation Reduction Act) will provide details on the Inflation Reduction Act’s implementation.

Andres Gluski, CEO of AES Corporation, a utility- and energy giant, stated: “the amount of renewables we’re going have to build over ten years is immense and I don’t believe everybody has really digested that.”

(Reporting by Liz Hampton in Denver; Editing by Marguerita Choy).