11 February 2022
Market Forces has worked with Woodside and Santos shareholders to formally call on Australia’s two largest, and rapidly growing, oil and gas producers to manage down production in line with a net zero emissions by 2050 pathway.
The resolutions, which will be voted on at the companies’ annual general meetings in April, follow significant investor support for similar calls at last year’s AGMs, which saw 19% of Woodside and 13% of Santos shareholders take the extraordinary step of voting for the companies to wind down production and return capital to shareholders.
“The need for these resolutions has only increased over the past year, with both companies pursuing mergers to drastically increase their oil and gas production capacity, and moving ahead with billions of dollars worth of new projects that are incompatible with the Paris Agreement’s climate goals and International Energy Agency’s Net Zero Emissions by 2050 scenario,”said Market Forces Asset Management Campaigner Will van de Pol.
“Woodside and Santos have not only rejected investors’ demands for alignment with global climate goals, they’ve actually moved in the complete opposite direction.”
Likely with investor sentiment in mind, both Woodside and Santos claim to support the Paris Agreement’s climate goals and have set their own operational emissions targets, aiming for net zero by 2050 and 2040 respectively. Yet the vast majority of these companies’ emissions – those generated when their oil and gas is burned – is not covered by their targets, allowing them to continue undermining the Paris goals by increasing production. According to the International Energy Agency, getting to net zero by 2050 means there is no room for new oil and gas projects, and production must fall rapidly.
“Woodside and Santos’ expansion plans threaten to waste billions in investor capital on projects that would be stranded by the low-carbon transition that’s already underway,” said van de Pol. “These resolutions present a necessary opportunity for investors to live up to their own climate commitments, while protecting their capital and ensuring employee transition and asset decommissioning obligations are adequately planned and resourced.”
Just this week, Santos announced it had increased its reserves by 80% in 2021, primarily due to its merger with Oil Search and final investment decision on Barossa LNG, a project so emissions-intensive energy experts have labelled it ‘a CO2 emissions factory with an LNG by-product’.
Woodside’s planned merger with BHP would see its production roughly double, while the company’s Scarborough-Pluto LNG and Sangomar oil plans could see the company spending more than half its current market capitalisation on projects that are incompatible with the Paris Climate Agreement.
Climate Analytics concludes the Scarborough-Pluto project “represents a bet against the world implementing the Paris Agreement”. Carbon Tracker states “Pluto Train 2 is not competitive even in the [IEA’s 2.7°C warming scenario] STEPS – that is, a world that utterly fails to decarbonise – meaning the deal with BHP is likely going to trigger Woodside to sanction one of its worst assets, increasing risk for its investors.”
Carbon Tracker has also identified the $3.9 billion Sangomar project as the third highest cost oil project sanctioned in 2020 that is incompatible with the IEA’s (net-zero by 2070) Sustainable Development Scenario, let alone a net-zero by 2050 scenario.
Read the resolutions and supporting statements in full: