Why ExxonMobil green energy investments aren't 'needle-moving'
During CERAWeek 2024, Yahoo Finance's Julie Hyman interviewed ExxonMobil (XOM) CEO Darren Woods, who discussed the company's plans for decarbonization and various energy initiatives. Raymond James Managing Director and Equity Research Analyst Pavel Molchanov joins the Live Show to provide insights into this outlook.
Molchanov acknowledges that it is "factually true" that fossil fuels will continue to be needed, even as the world aims for net zero emissions by 2050: natural gas will be necessary for chemical production and aviation will require oil, he explains. However, the analyst notes that global oil demand will eventually peak and decline, though the timeline is unclear.
While outlining several ExxonMobil green energy initiatives, Molchanov believes that the "only oil companies today that are truly needle-moving in their sustainable energy investments" are based in Europe. He notes that American oil and gas companies are usually much further behind in this regard.
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Editor's note: This article was written by Angel Smith
Video Transcript
BRAD SMITH: CERAWeek by S&P Global bringing together all of the top names in oil and natural gas for the annual global energy conference. And Yahoo Finance's had a front row seat bringing top commentary, including a conversation with ExxonMobil CEO Darren Woods where he spoke with our very own Julie Hyman about the energy transition.
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DARREN WOODS: Our emphasis has been, one, recognizing the solution set that the world has been pursuing with wind, and solar, and EVs is a necessary but not sufficient set of solutions, and that we've needed a much broader set of solutions to try to drive the change and the transition that everybody is hoping for.
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BRAD SMITH: For much more on the energy space, we're now joined by Paul Molchanov who is-- Pavel Molchanov, excuse me, Raymond James managing director and equity research analyst. Pavel, thanks so much for taking the time here today. You just heard the commentary there from Darren Woods here. I'd love to get your perspective on what he had to say about this broader transition and what some of those takeaways that he's seeing from that seat at ExxonMobil from the CERAWeek conference.
PAVEL MOLCHANOV: It's factually true that fossil fuels will continue to be needed for a long time to come. I mean, no one has seriously disputed that. So when we talk about net zero emissions by 2050, right, that's 26 years from now to state the obvious.
And even then, by 2050, there will still need for some amount of fossil fuels, for example, natural gas to make chemicals, oil for aviation and the marine market. But it is a question of time before, for example, global oil demand peaks and begins to decline. We just don't know yet know precisely what that timetable looks like.
SEANA SMITH: So then Pavel with that in mind, what do you think this really tells us about Exxon's strategy then given the fact that demand for oil remains high and is likely to remain high, like you are saying here, for years to come?
PAVEL MOLCHANOV: Well, we know that Exxon is acquiring Pioneer Natural Resources as one of the largest acquisitions in the history of the oil and gas industry. We know that Exxon is investing in some kind of renewable and energy transition initiatives. So carbon capture that you heard in the interview about.
But look, as a general premise, the only oil companies today that are truly kind of needle moving in their sustainable energy investments are in Europe. So these are going to be companies like BP, Equinor, Shell, Total, Eni. American oil and gas companies are generally further behind in their energy transition plans and the same thing I would say for companies like Saudi Aramco, or PetroChina, or Petrobras.
