18 November 2019
Senex, an Australian oil and gas company, states in its annual report that the company “recognises and accepts the science of climate change and fully supports the objectives of limiting global temperate rise as agreed by governments in the 2015 Paris Agreement.”
It seems, however, from the responses at today’s annual general meeting in Brisbane that those words are hollow. According to a recent report by Global Witness, if global warming is to be kept to 1.5 degrees:
- any production from new oil and gas fields, beyond those already in production or development, is incompatible with limiting warming to 1.5°C
- all of the $4.9 trillion forecast capex in new oil and gas fields is incompatible with limiting warming to 1.5°C
- 9% of oil and 6% of gas production forecast from existing fields is incompatible with limiting warming to 1.5°C.
“Isn’t it misleading for Senex to claim it supports [the Paris agreement] when the company’s plans to triple production over the next two years are actually undermining the Paris Agreement’s goals?” a shareholder asked.
“Your options are you can continue to produce electricity from coal or oil or gas,” responded Trevor Bourne, ignoring the rapid shift to renewable energy that needs to happen and will happen if we want to stay within 1.5°C. “If you want to continue to produce energy on the scale that the world is demanding, gas will continue to maintain a significant place in that,” he insisted.
Shareholders didn’t seem as convinced.
One shareholder asked about a $150 million debt facility secured from ANZ in 2018 to support Senex’s growth agenda. Commonwealth Bank has recently come out with a policy to not finance new oil and gas projects that are inconsistent with the goals of the Paris Agreement. The other big Australian banks are facing community campaigns calling for similar policies.
“With financial institutions shifting out of fossil fuels, are we likely to be able to refinance this loan towards the end of its tenor,” the shareholder asked.
Bourne didn’t seem to have realised the Commonwealth Bank has said they were restricting loans to oil and gas. He also didn’t think it would be a problem. “We are not of the view – at least for the next 10-15 years – that there will be a large problem getting debt funding for appropriate projects in the gas space.” He then went into detail about a recent gas project, of which all four big Australian banks, NAB, Westpac, ANZ & Commonwealth Bank, contributed to.
Herein lies the problem. According to our ‘Out of line, out of time’ study, Senex is one of 21 companies in Australia whose operations are totally at odds with holding warming to 1.5°C. The company does not see nor is it planning for a 1.5°C-aligned energy transition. And the big banks are lending these companies millions of dollars to expand their operations despite the urgent need to rein in fossil fuel use.