1 May 2020
Oil Search, Australia’s third largest pure play oil and gas company, today told shareholders its current strategic review will lead the company to “settling on a strategy that is consistent with the interests of shareholders.“
Company Chair Richard Lee went on to say, “we wouldn’t set in the strategy a plan to risk shareholders’ capital on stranded assets.”
While this may sound promising, the comments followed claims about further oil and gas exploration and demand that were clearly inconsistent with analysis of IPCC modelling, which has found that “over the next decade any production from new oil and gas fields, beyond those already in production or development, is incompatible with limiting warming to 1.5°C.”
Last year, independent analysis by the Carbon Tracker initiative found 30-40% of Oil Search’s planned capital expenditure out to 2030 would be wasted on oil and gas projects that could never be burned under the IEA’s Sustainable Development Scenario.
Given that scenario ignores the Paris Agreement’s 1.5°C goal, and relies on unproven carbon capture and storage, the potential capex at risk under a truly Paris-aligned scenario could be expected to be even higher.
If Oil Search is serious about not exposing shareholders to stranded asset risk, it must abandon its plans to increase oil and gas production, which are out of line with the Paris climate goals.
Tell your super fund to ditch climate-wrecking companies like Oil Search
Investor pressure mounting
In recent weeks, both of Oil Search’s major Australian oil and gas peers, Woodside and Santos, have faced massive shareholder revolts over climate change. Investors have called on both companies to ensure investment decisions and emissions reductions – including the use of their products – align with the climate goals of the Paris Agreement.
Unlike Santos and Woodside, Oil Search did not face a formal shareholder proposal on this issue, but was challenged by shareholders attending today’s virtual AGM over its oil and gas expansion plans.
With Oil Search currently undertaking a strategic review, investors must take this opportunity to demand a Paris-aligned pathway from the company. This means:
- No new oil and gas expansion or exploration projects
- Winding down oil and gas production from existing projects in a time frame consistent with a 1.5°C warming outcome.
Unless investors, including our super funds, are making these demands of fossil fuel companies like Oil Search, Woodside, and Santos, there can be no justification for remaining invested.
.@OilSearchLtd says it will set a strategy consistent with shareholders' interests and won't risk capital on stranded assets… Does the company and its investors realise meeting the Paris #climate goals means no expansion of dirty oil and gas? pic.twitter.com/XCN0jROfrD— Market Forces (@market_forces) May 1, 2020