Ever since the arrival of the ESG craze, we have discussed the change in "optics" that Exxon has been trying to pull off in order to placate some of the most vocal activist shareholders, some of whom now happen to be on the company's board. But now, instead of just purely superficial changes, Exxon may be on the cusp of making fundamental changes as well as the oil and gas major is considering whether or not to shutter "several major oil and gas projects", according to a new report from the Wall Street Journal.
The company's board, which includes three directors nominated by activist investors, has "expressed concerns about certain projects, including a $30 billion liquefied natural gas development in Mozambique and another multibillion-dollar gas project in Vietnam," the WSJ reports, while caveating that the impact from these projects coming online likely wouldn't have been felt for years to come.
WSJ detailed the two projects:
The Mozambique project, called Rovuma, would tap vast reserves of natural gas off the coast of the southern African country, then chill them to a liquid state at an onshore plant to be exported around the world. It is one of the largest projects in Exxon’s portfolio, and its proximity to India could give Exxon an opportunity to export gas to a fast-growing market.
In Vietnam, Exxon and its partners discovered a large gas field in 2011 in waters 50 miles off the coast but have yet to develop it. Gas from the field, known as Ca Voi Xanh or blue whale, would be sent through a pipeline to planned onshore power plants. Vietnamese officials have said the project would generate $20 billion in government revenue. The field is near contested waters claimed by China in the South China Sea, and analysts say China is actively disrupting Vietnam’s offshore oil-and-gas industry, adding geopolitical complications to the project.
The change in strategic direction comes as the board is facing growing pressure from investors to restrain its fossil fuel investments and limit its carbon footprint. Exxon is also in the midst of a review of the company's five-year spending plan, which is where the idea came up. No action has been taken yet and it isn't a guarantee that the projects will be shuttered or go forward.
The board is also considering the carbon footprint of the new projects, and how they would affect the company's ability to meet environmental promises it has made.
"The annual projected emissions from the Mozambique and Vietnam projects were among the highest in Exxon’s planned pipeline of oil and gas projects," the Journal wrote.
Back in September, we reported that as part of appeasement of the ESG lobby, the oil giant planned on implementing disclosures of shale emissions. The company announced it would start measuring its methane emissions from production of natural gas at a facility it owns in New Mexico. Exxon joins other shale gas producers, like EQT, who already provide similar data.
Bart Cahir, a senior vice president at Exxon Mobil, told Reuters: "Certifying our natural gas will help our customers achieve their goals." The oil major has signed an agreement with "independent measuring firm MiQ to certify 200 million cubic feet of natural gas per day" at its New Mexico facilities.
You can read the full WSJ report on Exxon potentially shuttering its two new projects here.
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