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Highlights
- Environmental group Earthworks found several oil and gas companies such as Exxon Mobil Corp, Royal Dutch Shell and others were involved in oil flaring at the Texas Permian oil field without having requisite permits.
- About 69 to 84 per cent of oil flares at the Permian field were likely not permitted, according to the report.
Environmental group Earthworks, in a report published today stated that several oil and gas giants such as Exxon Mobil Corp (LON:0R1M), Royal Dutch Shell (LON: RDSA) and others were oil flaring without having the required permits at the Texas Permian oil field.
The Permian oil field, located in Texas, is one of the largest oilfields in the US. Moreover, the state of Texas also has one of the most permissive laws regarding gas flares. Yet despite having more permissible oil flare state laws, the report found between 69 per cent and 84 per cent of the oil flares at the location were likely not permitted.
Oil or gas flaring is the process of burning off of associated gas during the various processes of oil and gas recovery in a controlled environment, particularly pressure relief, waster product removal and safe combustion of volatile compounds.
While this process reduces the number of methane emissions, the practice still contributes to greenhouse gas emissions.
US President Joe Biden is expected to announce new regulations for the oil and gas sector related to reducing methane emissions next month as part of his administration’s climate change driven policy.
In this article, let us take a closer look at 4 FTSE listed stocks in the oil and gas sector and how they reacted to the development:
- Royal Dutch Shell (LON: RDSA)
FTSE 100 index listed company Royal Dutch Shell is a UK based multinational oil and gas major. The company’s shares fell by over 2 per cent following the news.
In response to the Earthworks report, a spokesperson from Royal Dutch Shell said the company had not routinely flared in the Texas Permian basin since 2018.
(Image Source: Refinitiv)
Royal Dutch’s shares were trading GBX 1,405.80, down by 2.47 per cent on 19 August at 08:19 AM GMT+1. Meanwhile, the FTSE 100 index was trading at 7,051.19, down by 1.65 per cent.
The company’s market cap stands at £59,115.27 million as of 19 August and its one year return is at 22.39 per cent.
- Exxon Mobil Corp (LON:0R1M)
US based Exxon Mobil Corp is one of the largest oil and gas companies in the world. The company responded similarly to Royal Dutch Shell, as its spokesperson said Exxon’s flaring were at a record low of less than 1 per cent at the Permian Basin.
Exxon on Wednesday also announced that it is considering pledging a net zero goal by 2050 amid rising investor pressure, compared to its earlier goal of reducing emissions by 15 to 20 per cent by 2025.
The company said that it expects Brazil to be a great opportunity for achieving such low emission oil production.
(Image Source: Refinitiv)
Exxon’s shares in a pre-market session were down by 2.11 per cent to USD 55.39 on 19 August at 04:43 AM GMT-4 on NYSE. Meanwhile, the fossil fuels sectoral index on LSE was trading at 4,995.29, down by 2.97 per cent.
The company’s one year share return is at 29.74 per cent as of 19 August.
- BP PLC (LON: BP)
Another FTSE 100 index listed company BP is a UK based major player in the oil and gas industry. The company recently announced its H1 2021 and Q2 2021 results, reporting a return to a profit in H1 2021 with a profit of US$ 7,783 million, from a loss of US$ 21,213 in H1 2020.
It also reported an increased dividend in Q2 2021 at 5.46 cents per share, up from 5.25 cent per share in Q2 2020, due to strong results, disciplined financial focus and other factors.
(Image Source: Refinitiv)
BP’s shares were trading GBX 289.80, down by 4.25 per cent on 19 August at 08:36 AM GMT+1. The company’s market cap stands at £ 61,048.87 million as of 19 August and its one year return is at 2.33 per cent.
- PJSC Gazprom (LON: OGZD)
FTSE IOB index listed firm PJSC Gazprom is a Russian majority state owned energy company. Gazprom said on Wednesday that its pipeline deliveries to Europe have been down this year due to unusually high demand.
(Image Source: Refinitiv)
PJSC Gazprom’s shares were trading at USD 7.84, down by 2.80 per cent on 19 August at 08:34 AM GMT+1. Meanwhile, the FTSE IOB index was trading at 874.93, down by 1.43 per cent.
The company’s market cap stands at £69,401.23 million as of 19 August, and its one-year return is at 51.80 per cent.
Related Article: 3 FTSE oil and gas stocks in focus after OPEC maintains 2021 demand forecast
Bottom Line
As the US and UK plan a shift towards net zero, decarbonisation of the oil and gas sector remains one of the critical industries which will help make that transit.
