Oil and gas giants slammed for ‘endlessly chasing growth’
Most of the world’s largest oil and gas companies are risking their futures by continuing to reward bosses for increasing production and growing reserves.
The warning from think-tank Carbon Tracker comes after it forecast fossil fuel demand to peak over the next decade amid rapid growth in renewable energy and clean technologies.
Its latest study reveals that just one of the 40 largest oil and gas companies across North America, Europe and Australia does not provide incentives for growth.
US-based Diamondback Energy instead rewards executives for controlling costs and improving financial returns, while most others waste money on unprofitable projects that could destroy value.
The companies with the greatest focus on rewarding volume growth are Anadarko, Cabot Oil & Gas, CNRL and Oil Search, while Total and Repsol are among those that prioritise this least.
Carbon Tracker highlighted how a 2% excess of supply over demand caused the 2014-16 oil price crash and saw the biggest fossil fuel companies’ value plummet by 51%.
Moreover, it warns that no more than a third of proven reserves can be burned if the world is to stay below 2˚C of global warming.
“Executives should not have pay packets that reward them for chasing ever greater volumes of reserves and output,” said senior analyst Andrew Grant.
“Companies should focus on extracting maximum value, particularly in a low-carbon transition.”