Shell CEO sees energy turmoil: “idle capacity is too low”
ExxonMobil chairman also sees continued price rise as demand picks up
The crisis in the energy sector is starting to worry the CEOs of the oil and gas giants. In an interview with news agencies in Singapore, Shell chairman Ben van Beurden said the world was heading for “a turbulent period” following the interruption of gas supplies from Russia and even suggested rationing in Europe. Earlier this week, ExxonMobil boss Darren Woods partly blamed the pressure on the transition to sustainable breeding stock for higher prices — and assured that if it’s expensive now, it will get worse.
“Idle capacity is very low and demand is still recovering,” Van Beurden told Bloomberg and Reuters. “So with that, and also the uncertainties with the war in Ukraine and the sanctions that could come from it, there’s a good chance we’re facing a turbulent period.” Moscow has significantly reduced supplies on one of its main gas pipelines connected to Europe, the Nord Stream. Now, the mainland is preparing for a total shutdown. “Will there be a lot of new extra LNG supplies to fill the gap? I think not.”
Russian natural gas accounts for a third of Europe’s imports. After the pandemic has cooled, demand for energy has grown, not only on the continent. A controversial solution for European countries would be to extract up to 50 billion cubic meters of natural gas a year from the Groningen field in the Netherlands, in the face of strong resistance from the Dutch government, according to Shell’s CEO. That’s because the extraction, interrupted for years, has already caused a series of earthquakes in the region.
With oil, the outlook is even worse. Pressured by the transition to more sustainable energy matrices and with the slowdown in demand during the pandemic, the sector’s giants failed to invest about US$ 1 trillion, according to the sector’s estimates. With demand normalizing, global oil prices have soared to more than $100 a barrel this year.
From a conference in Brussels on Monday, hosted by the German Marshall Fund, the Exxon CEO said the price of oil will continue to rise until it spurs more production, even in the face of pressure from ESG. “They always say that the solution to high prices is high prices. And that’s exactly what I think we’re going to see. It’s a question of how much they have to go up,” Woods said. Unlike competitors BP and Shell, Exxon has not committed to reducing its production.
Regarding the proposal by the G7 to impose a price cap on Russian oil — a way to reduce Kremlin revenues that are used to finance the war in Ukraine — the CEO of Shell was skeptical: “You can already see all the flaws ”. For Van Beurden, the system would only work if there was broad participation from Europe and the United States. Otherwise, “you will just continue to see what is currently happening, which is Russian oil that will go to countries that can still buy Urals.” [o principal petróleo de exportação da Rússia].”
Source: Value Pipeline