Opinion

The test of a first rate intelligence….matched by inertia elsewhere


David Bamford writes:
Most of you will have noticed that Rex Tillerson, former boss of ExxonMobil - also multi multi-millionaire courtesy of his remuneration package - is now the US Secretary of State, running that great country's international diplomacy. Having bumped into his former employer's ideas as to international business – or more accurately, been bumped into by his former employer – I look forward to observing what happens!

Many of you might have missed the fact that he seems to believe two things:

1.      oil & gas will dominate energy supplies for another 50 years, and

2.      carbon driven climate impact is real and we need to do something about it,

that at first seem conflicting, contradictory.

Shades of F Scott Fitzgerald!

So, here's a question: what does the company that employs you (or pays your pension, or you buy your fuel from) believe and what are they doing about it? Being slightly more precise, assuming they believe 1. and why wouldn't they if they are in the oil & gas business, what are they doing about 2., if anything?

The European Majors (and one or two others) appear to be in action via their OGCI initiative and their most recent funding announcements. Despite no US companies signing up for it, and the annual amount per company being "less than Bob Dudley's remuneration", I think OGCI is a potential game changer. It specifically talks about CCS and Emissions Reduction (and maybe we should add Utilisation) so is addressing CO2 and CH4.

Thus BP, Shell, Statoil, ENI and Total seem to have all committed themselves to this 'Tillerson view'.

Digging down into the asset portfolios of any one of them will reveal producing assets that will go on for another 25 years (at least).
And they have all signed up to $10m a year with OGCI.
Of course they have very generous remuneration policies that reward production growth and cost cutting but only nod in the direction of CO2 and CH4.
So for them, a decent question is "what exactly are you doing????"

But there is another group of companies, for example the so called FTSE E&Ps with lower market caps, for example Tullow, Premier, Enquest, Ithaca, who probably believe 1., have equally or arguably more outrageous remuneration polices, have not signed up to OGCI (maybe they weren't asked), for whom the question might be "why are you doing nothing?"

Why should you not ask these questions as either employees, pensioners or shareholders?



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