Energy companies on hot coals?

The Carbon Tracker Initiative May report1 (in follow-up to its initial 2013 report 2)  has given a new head of steam to the lively debate ignited in the oil and gas industry by drilling down into the balance sheet reserves of major international oil companies and putting together a ‘carbon supply cost curve’.

Investors too are now becoming very engaged in the debate. The oil and gas sector has struggled in recent years to generate a reasonable rate of return, even with oil prices of over $100. This, and the threat of related assets becoming stranded, has prompted investors to ask oil company executives tough questions. Some investors have even gone so far as to wonder whether explicit exclusion of the oil and gas sector from their portfolios is now a realistic option.

Sandra Carlisle, Newton.

 

1Unburnable carbon 2013: Wasted capital and stranded assets.

2Carbon Supply Cost Curves. Evaluating financial risk to oil capital expenditures.

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