Facing pressure from investors concerned about lagging profits, BP announced a strategic shift, slashing renewable energy investments by over $5 billion and increasing oil and gas spending by approximately 20% to $10 billion annually. This decision, mirroring moves by competitors, prioritizes shareholder returns and increased oil and gas production, aiming for 2.3 to 2.5 million barrels per day by 2030. While BP maintains its net-zero ambition, critics argue this focus on short-term profits jeopardizes climate commitments and undermines the energy transition. The company plans to pursue capital-light partnerships in remaining renewable energy ventures.
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President Trump’s threatened 25% tariffs on Canadian exports are facing opposition from industry groups in both countries. These groups argue that the highly integrated energy sectors of the U.S. and Canada would be severely harmed by such tariffs, impacting jobs and economic prosperity. While some U.S. lumber interests support the tariffs, the American Petroleum Institute has specifically requested an exemption for oil and gas. Canada’s heavy reliance on the U.S. market, coupled with regulatory hurdles and lack of pipeline infrastructure, leaves it vulnerable to these trade disputes.
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President-elect Trump has threatened the European Union with tariffs unless it significantly increases its purchases of American oil and gas, citing a large trade deficit. This threat follows Trump’s first post-election trip abroad, and comes as the EU has strengthened its trade defenses against such coercive practices. The EU is already a major importer of US LNG and crude oil, but Trump’s “America First” approach signals potential significant trade disruptions. His past actions involving tariffs on steel and aluminum demonstrate his willingness to pursue protectionist policies. The EU has vowed a unified response to any aggressive trade actions from the incoming US administration.
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The Biden administration is implementing a new rule that will impose a federal fee on oil and gas companies exceeding specific methane emission levels. This rule, announced at COP29, fulfills a congressional directive within the 2022 climate law and aims to reduce one of the most potent greenhouse gases. The fee, expected to begin at $900 per ton in 2024 and increase to $1,500 per ton by 2026, aims to incentivize the adoption of emission-reducing technologies and reduce methane emissions by 1.2 million metric tons by 2035, equivalent to removing eight million cars from the road for a year. While industry groups are expected to oppose the rule, environmental organizations support it, advocating for the oil and gas sector to be held accountable for its contributions to climate change.
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Our conference aims to address the climate crisis and transition away from hydrocarbons in a just and equitable manner, welcoming solutions from all stakeholders, including the oil and gas industry. While we are open to investments in green transitioning projects, we also see opportunities in Azerbaijan’s plans to increase gas production, including new pipeline infrastructure. This includes potential joint ventures and the role of natural gas as a transitional fuel, recognizing that some oil and gas production may continue beyond 2050. However, we emphasize that developing new oil and gas fields is incompatible with limiting warming to 1.5°C, a point that aligns with the global agreement to transition away from fossil fuels.
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John Q. Hosedrinker