Equity Index Giant MSCI to give 10,000 Firms Global Warming Ratings

The firm, which runs the widely-tracked $60 trillion All Country World Index, is launching Implied Temperature Rise scores, which estimate whether a firm’s activities and plans are consistent with keeping global warming below 2 degrees Celsius.

“The idea is to get companies to change their strategies,” said MSCI’s head of ESG and Climate, Remy Briand, who estimates nearly 60% of firms still don’t disclose even the most basic environmental data.

MSCI’s new approach converts the current and projected greenhouse gas emissions, taking into consideration emissions reduction targets, of each company to an estimated rise in global temperature.

Projections are calculated by comparing those projected emissions with the global carbon budget that remains if the planet is to keep temperature rise this century below 2°C.

Briand laid out examples using two oil giants, Exxon Mobil and Royal Dutch Shell.

Exxon, which has been under heavy scrutiny  for its approach to climate change, produces a 4C rise score – a scenario that scientists warn would lead to unprecedented heatwaves, severe droughts, and a major rise in sea levels and mass flooding.

Shell produces an implied 2C rise, having set targets to cut the carbon intensity of its products by at least 6% by 2023, by 20% by 2030, by 45% by 2035 and by 100% by 2050.

“The message is to make the commitment more public,” Briand said.

His assumption is that because MSCI’s indexes and data are used by most of the world’s big investors, companies will need to have low implied temperature rise scores to encourage those money managers to park their cash in them.

There are currently no standardised rules around what the big global firms have to disclose about their emissions. Many also make misleading claims that they are on course to hit net zero targets, Briand said, by leaving out large chunks of their business when they make their own projections.

Briand said leaders going to the UN’s COP26 climate change conference in Scotland later this year should pledge to fix those kinds of problems.

“A wish would be to get net-zero commitments across the board for all companies,” he said. “If that happens, if it becomes compulsory across many countries, there will an acceleration in companies’ strategies”.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Marc Jones, Editing by Rosalba O’Brien)

Energy Stocks Help Steady FTSE 100 After Worst Week Since Mid-August

By Devik Jain

The blue-chip index climbed 0.6%, after sliding 1.5% last week on concerns of a stalling domestic economic recovery.

Oil majors BP and Royal Dutch Shell each rose nearly 2%, tracking crude prices, while banks were 1.9% higher. [O/R]

The domestically focused mid-cap FTSE 250 index advanced 0.2%.

Investor focus is now on data releases in Britain and the United States later this week, including jobs and keenly watched inflation and retail sales, for clues on monetary policy actions ahead of central bank meetings next week.

“There appears to be a build up in anxiety that the continued rise in inflationary pressure may well be much more persistent than central bankers would have us believe,” Michael Hewson, chief market analyst at CMC Markets UK, said.

“In July both UK and U.S. consumer prices saw a pause as some base effects dropped out of the headline numbers, and while there is some expectation that this might continue in August, this appears to be more of a hope than anything else.”

Last week, a Reuters poll forecast that the Bank of England will raise borrowing costs by end-2022, earlier than previously thought, and it could come even sooner.

Among individual stock moves, Associated British Foods fell 2.4% after fourth-quarter sales at its Primark fashion business were lower than expected.

Recruiter SThree rose 3.8% after forecasting annual earnings “significantly above” estimates.

Transport company FirstGroup jumped 3.2% after saying its First bus passenger volumes reached 65% of pre-pandemic levels on average in recent weeks.

Martin Sorrell’s S4 Capital fell 3.8% despite the advertising group lifting its annual gross profit guidance, driven by strong demand from global tech platforms.

(Reporting by Devik Jain and Amal S in Bengaluru; Editing by Shounak Dasgupta and Alexander Smith)

Over 80% of Oil Output in Gulf of Mexico Still Offline a Week After Ida

Energy companies have been struggling to resume production after Ida damaged platforms and caused onshore power outages. About 1.5 million barrels per day of oil production, or 84%, remains shut, while another 1.8 billion cubic feet per day of natural gas output, or 81%, was offline, the Bureau of Safety and Environmental Enforcement said.

A total of 99 oil and gas production platforms remain evacuated, down from the 288 originally evacuated.

“The entire region is still struggling with resupply,” said Tony Odak, chief operating officer of Stone Oil Distributor, which supplies fuel to the offshore industry. “The refiners are coming back up slowly, but there is so much infrastructure that needs to be brought back online and inspected as well.”

Five refineries in Louisiana remained shut on Monday, accounting for about 1 million barrels-per-day of refinery capacity, or about 6% of the total U.S. operable refining capacity, the Department of Energy said.

All three refineries in the Baton Rouge area and one near New Orleans have begun to restart, accounting for 1.3 million bpd of refining capacity, DOE said. However, the refiners will not produce at full rates for several days.

Operations remain limited at the Louisiana Offshore Oil Port (LOOP) marine terminal, and repairs are under way, DOE said.

Royal Dutch Shell Plc, the largest U.S. Gulf Coast producer, on Sunday began redeploying staff to its Enchilada and Salsa platforms.

The region is still struggling with power outages, after Ida knocked out power to more than 1 million people last week. As of Monday morning, there were still about 573,000 outages due to Ida, including 568,000 customer outages remaining in Louisiana, DOE said.

The U.S. Coast Guard said on Monday it was investigating nearly 350 reports of oil spills in and along the U.S. Gulf of Mexico in the wake of the storm.

The lower Mississippi River and New Orleans ports were reopened to traffic and cargo operations, allowing the resumption of grain, metal and energy shipments.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Stephanie Kelly in New York; Additional reporting by Liz Hampton in Denver; Editing by Sandra Maler and Matthew Lewis)

U.S. Offshore Oil Output Lags as Louisiana Refiners Restart After Ida

Energy companies have been coping with damaged platforms and onshore power outages and logistical issues, slowing efforts to restart production. Some 88% of crude oil output and 83% of natural gas production remained suspended. Climate change is fueling deadly and disastrous weather across the globe, including stronger and more damaging hurricanes.

About 1.6 million barrels of crude oil remained offline, with only about 100,000 barrels added since Saturday. Another 1.8 billion cubic feet per day of natural gas output also was shut-in, the regulator said.

A total of 104 oil and gas platforms and five rigs remain evacuated on Sunday, down from the 288 originally evacuated.

Royal Dutch Shell Plc, the largest U.S. Gulf Coast producer, on Saturday was evaluating damage to its West Delta-143 offshore platform, which transfers about 200,000 barrels of oil and gas per day from three offshore oil fields.

The lower Mississippi River and New Orleans ports were reopened to traffic and cargo operations, the Coast Guard said on Saturday, allowing the resumption of grain, metal and energy shipments.

REFINERIES RESTARTING

Four oil refineries in Louisiana have initiated restart processes after Hurricane Ida knocked out most of the state’s oil processing. Five others have yet to resume operations, the U.S. Department of Energy said on Sunday.

Three oil refineries in the Baton Rouge area and one near New Orleans have begun to restart units, the DOE said, without naming the facilities. The four account for 1.3 million barrels per day of U.S. refinery capacity.

Utilities have restored electric power to seven of the impacted refineries since Friday, the DOE said.

Placid Port’s Allen refinery, across the River from Baton Rouge, and Delek’s refinery, at Krotz Springs, have started to resume activity during the weekend, according to industry sources. Both companies did not reply to requests for comments over the past several days.

Marathon Petroleum Corp on Friday said its 578,000 barrel-per-day (bpd) Garyville, Louisiana, refinery, the state’s largest, was in the initial stages of restarting. cut?

Exxon Mobil Corp’s had also resumed operations at its 520,000-bpd Baton Rouge refinery.

Full restoration of normal refinery output will take two to three weeks for refineries in the region, an analyst estimated.

The five refineries still shut in Louisiana account for about 1.0 million barrels per day, or approximately 6% of total U.S. operable refining capacity, the DOE said.

The restart timelines in New Orleans may take longer due to flooding and ongoing power supply issues, the DOE said. Utility provider Entergy Corp on Saturday said some of the refinery locations may be without power until Sept. 29.

Elsewhere in the Gulf of Mexico, a private dive team on Sunday was attempting to locate the source of a suspected oil spill spotted in the Bay Marchand area, the U.S. Coast Guard said.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sabrina Valle; additional reporting by Erwin Seba; Editing by Lisa Shumaker)

 

The Hottest Stocks On The Market Right Now

Stocks are back at all-time highs so the party goes on!

AMD bounces off the 38,2%  Fibonacci and aims higher again.

Autodesk climbs up after a short break inside of the flag.

Activision Blizzard is still below crucial horizontal resistance.

Equinix escapes from the symmetric triangle to the upside.

3M does the same but to the downside.

Same with British American Tobacco.

T-Mobile patiently waits for the buy signal inside of the wedge pattern.

Same for Royal Dutch Shell, but in this case, we’re in the triangle/rectangle.

Rolls-Royce climbs higher after the breakout of the crucial horizontal resistance.

For a look at all of today’s economic events, check out our economic calendar.

Fifty Shades of Green: EU Sustainable Fund Rules Muddy the Waters

A Reuters analysis of funds marketed to retail investors increasingly hungry for anything green shows asset managers are adopting a wide range of strategies to justify the sustainable label since the EU brought in disclosure rules in March.

The EU’s Sustainable Finance Disclosure Regulation (SFDR) is an attempt to deliver transparency for investors focussed on environmental, social and governance (ESG) issues but fund managers say the definition of sustainability is too vague and has created confusion about what makes the cut.

Take the Allianz Global Water fund.

It actively invests in companies that improve the supply, management and quality of water and is marketed as falling under Article 8 of the SFDR, which means it is a fund that promotes “among other characteristics, environmental or social characteristics, or a combination of those characteristics”.

Now take one of Legal & General Investment Management’s (LGIM) Article 8 exchange-traded funds (ETF).

The L&G UK Equity UCITS ETF tracks the Solactive Core United Kingdom Large & Mid Cap Index, which excludes coal miners and firms that make weapons such as cluster bombs or have breached U.N. principles on corporate values.

Its top 10 holdings are the same as for L&G funds tracking the FTSE 100 index that don’t carry the Article 8 label and include oil giants BP and Royal Dutch Shell, miner Rio Tinto and British American Tobacco.

L&G said the fund was considered Article 8 because it promotes sustainability characteristics by applying LGIM’s Future World Protection List and this was a “binding element” of the investment process.

“The lens we should use is what is right. It’s not just about what is legally required because it seems not very much is legally required,” said Eric Christian Pedersen, head of responsible investments at Nordea Asset Management.

GREEN RUSH

The new EU rules have sparked a rush by investment firms to badge products as sustainable as they seek to grab a share of the booming market in sustainable mutual funds that hit a record $2.3 trillion in the second quarter.

From March 10, the rules automatically placed all investment funds into a coverall Article 6 category. Managers could then upgrade them to Article 8, or Article 9 which is for products with an explicit sustainable investment objective.

The investment industry has dubbed Article 8 funds “light green” and Article 9 “dark green”, though the EU regulations do not use those terms.

A European Commission spokesperson said its rules were designed to ensure funds were transparent about the sustainability of products so investors could make choices, and was not a labelling scheme.

Reuters asked 20 of the biggest fund houses for a list of products they market as Article 8 or 9.

An analysis of the funds of the 14 firms that replied shows some Article 8 products have limited claims to sustainability, such as those tracking conventional stock and bond indexes, investing in fossil fuels or buying debt from countries with weak ESG standards such as Saudi Arabia and Nigeria.

Some claims hinge on funds excluding securities they would not have bought anyway, based on the index being tracked.

For some in the industry this represents so-called greenwashing, where the benefits of a business or asset are exaggerated to attract environmentally aware investors.

Hortense Bioy, director of sustainability research at Morningstar, said Article 8 funds ranged from climate-themed green to “very, very light green”, excluding just a few firms.

“Managers need to ask if they are even relevant,” she said. “That is the key message: investors shouldn’t expect anything from Article 8.”

INDEX TRACKERS

Industry experts say none of the asset managers is breaking any rules. Managers determine themselves which article to apply and Brussels does not check whether claims are justified.

The Reuters analysis shows some managers are more likely to brand funds as sustainable than others.

Two of Europe’s biggest firms, Alliance Bernstein and AXA Investment Management, classify nine in every 10 euros of assets they manage under the scope of SFDR as Article 8 or 9, according to data they supplied to Reuters.

Others such as Pictet Asset Management and Allianz Global Investors place a little over half of their relevant assets in those categories, their data showed.

Morningstar data published in July shows a third of the assets falling under SFDR are now billed as Article 8 or 9, with Article 6 products disappearing from recommendation lists sent by investment advisers to retail investors.

Many Article 8 funds have clear sustainability criteria, such as strategies that invest in businesses with the lowest carbon impact in their sectors, or Allianz’s water-focused fund.

For others, that’s not always the case. Candriam’s Cleome Index Europe Equities is another Article 8 product. It tracks the MSCI Europe index but excludes companies that don’t comply with the U.N. principles.

Critics say such exclusions are very limited.

When asked for an example, Candriam did not point to any company expelled from the U.N. list that is also part of MSCI Europe. The Candriam fund’s top 10 holdings replicate the index.

A Candriam spokesperson said it also applies exclusions on companies materially involved in controversial weapons, tobacco and thermal coal, and the Cleome equity fund uses proprietary ESG analysis relative to the benchmark, justifying Article 8.

Morningstar analysis shows one in four Article 8 funds has exposure to companies involved in controversial weapons and one in five to tobacco. A third of Article 8 and 9 funds have more than a 5% exposure to fossil fuel firms.

‘NASTY’ ESG?

Demand for funds with a sustainable label is soaring.

“There is a clear commercial opportunity,” said Eric Borremans, head of ESG at Switzerland’s Pictet Asset Management, which classes 57% of its assets as Article 8 or 9.

Borremans said Pictet had no index-tracking Article 8 funds but planned to apply the label to some after incorporating more exclusions.

U.S. investment giant BlackRock told Reuters it expected to exceed a target of putting 70% of its new, or rebranded, products this year under Articles 8 or 9.

Some funds use ESG thresholds to justify sustainable labels.

JPMorgan Asset Management says 51% of the securities in its Article 8 range must carry an ESG score in the top 80%. These are scores fund firms or third-party providers give companies based on ESG metrics such as carbon usage, governance or human rights in supply chains.

Critics say such thresholds are too weak.

“You have funds saying most of our holdings are not nasty and therefore I’m ESG,” said Pedersen at Nordea, which requires 100% of its Article 8 holdings be above a minimum ESG score.

The JPMorgan threshold, for example, also means 49% of companies in its funds could rank in the bottom 20% for ESG goals, although the funds exclude sectors such as tobacco, controversial weapons and coal miners.

JPMorgan Asset Management did not respond to questions about ESG scores. A spokesperson said the firm remained “focused on a thoughtful and thorough approach to the implementation of SFDR”.

Pictet’s Borremans said funds interpreting the rules loosely now can get away with it, but strategies sailing close to the wind will eventually be exposed.

By next year, the EU will flesh out its taxonomy — a list of environmentally sustainable economic activities — and from July 2022 funds must detail how they meet sustainability criteria based on the EU’s Regulatory Technical Standards (RTS) that will clarify disclosure requirements.

“It could hurt the reputation of an asset manager to offer financial products as falling under Article 8 and 9 or as taxonomy aligned if this cannot subsequently be backed when the RTS enters into application,” the European Commission spokesperson said in emailed comments.

Amundi’s head of cross-border product, Florian Schneider, said SFDR rules made clear products with minimal exclusions were Article 8.

“The danger is everyone blindly assuming all Article 8 funds offer the same level of ESG integration when there are very different shades of green.”

For a look at all of today’s economic events, check out our economic calendar.

($1 = 0.7274 pounds)

(Additional reporting by Simon Jessop; Editing by Sujata Rao, Alexander Smith and David Clarke)

Acquittal of Eni and Shell in Nigeria Case Faces Legal Challenge

In March, a Milan court acquitted the two companies and defendants in the oil industry’s biggest corruption case involving the $1.3 billion acquisition of a Nigerian oilfield a decade ago.

The Nigerian government said at the time it was surprised and disappointed by the verdict and would consider lodging an appeal.

The case revolved around a deal in which Eni and Shell acquired the OPL 245 offshore oilfield in 2011 to settle a long-standing dispute over ownership.

Prosecutors alleged that just under $1.1 billion of that amount was siphoned off to politicians and middlemen.

The court in Milan said there was no case to answer and acquitted the companies and all other defendants.

“We have always maintained that the 2011 settlement was legal. We will review the appeal that has been filed,” a Shell spokesperson said.

Eni said it acknowledged the appeal by the prosecutors and Nigerian government. “Waiting to read the reasons for the appeal; Eni confirms its total extraneousness to the contested facts,” a spokesperson said.

Last month, two prosecutors in the case were placed under official investigation by magistrates for allegedly not filing documents that would have supported Eni’s position. Italy’s justice ministry ordered an inquiry into the conduct of the pair.

(Reporting by Emilio Parodi; Additional reporting by Ron Bousso and Stephen Jewkes; Editing by Agnieszka Flak and Mike Harrison)

Shell’s Profit Soars as It Boosts Dividend and Launches Buybacks

The Anglo-Dutch company saw a surge in cash generation, driven by higher commodity prices and a recovery in global energy demand from the pandemic slump, which also helped it to cut debt. “We are stepping up our shareholder distributions today, increasing dividends and starting share buybacks, while we continue to invest for the future of energy,” Shell Chief Executive Ben van Beurden said in a statement.

Adjusted earnings rose to $5.53 billion, the highest since the fourth quarter of 2018, exceeding an average analyst forecast provided by the company for a $5.07 billion profit.

That compares with earnings of $2.9 billion a year earlier.

Shell increased its dividend for a second consecutive quarter by 38% to 24 cents, a year after it cut its dividend for the first time since the 1940s in response to the collapse in energy demand caused by the pandemic.

The company also launched a $2 billion share buyback programme that it aims to complete by the end of the year.

Free cashflow, a metric of the company’s performance following deep cost cuts last year, rose in the quarter to $9.7 billion, its highest since the first quarter of 2020.

(Reporting by Ron Bousso; Editing by Edmund Blair and Barbara Lewis)

Shell Greenlights Gulf of Mexico ‘Whale’ Oilfield Project

By Ron Bousso

The Whale development, operated by Shell which owns 60% of the project, alongside Chevron with 40%, is expected to reach peak production of around 100,000 barrels of oil equivalent per day (boed), Shell said in a statement.

Whale, which was discovered in 2017, holds a recoverable resource of 490 million barrels of oil equivalent and is scheduled to begin production in 2024.

In May, a court in The Hague ordered Shell to accelerate its energy transition plans and reduce greenhouse gas emissions by 45% by 2030, significantly faster than its current plan. Such cuts would mean shrinking its oil and gas business.

Shell said it will seek ways to accelerate its energy transition strategy and deepen carbon emission cuts, although it plans to appeal against the landmark ruling.

The deep-water Whale project will use a similar platform to an existing nearby Shell field, Vito, which is expected to reduce the development time and costs, Wael Sawan, Shell’s head of oil and gas production, or uptream, said in a statement.

Shell said on Monday that its “energy transition plan includes increasing investment in lower carbon energy solutions, while continuing to pursue the most energy-efficient and highest-return upstream investments.”

Shell said it anticipates Whale will deliver an internal rate of return of over 25%, significantly higher than the sector’s average of 10% to 15%.

(Reporting by Ron Bousso; Editing by Edmund Blair and Barbara Lewis)

Big Oil Bonanza as Shell Rockets 112 Points in a Month.

Royal Dutch Shell PLC, known colloquially as simply ‘Shell’, is having a field day, if you’ll pardon the pun, as its stock has rocketed by an astonishing 112.6 points, which equates to 8.09% in just one month.

As an overall result, Shell has stated today that it will boost shareholder pay-outs from the second quarter of this financial year after a sharp rise in petroleum prices and boost in demand for crude oil helped it reduce its debts.

Against the backdrop of woke, elbow-bumping caricaturist Western politicians who have spent the last few years spewing anti-business, anti-establishment diatribe in an arrogant, dictatorial way that only Banksy would be proud of and inventing absurd laws in the name of perceived ‘climate change’ along with the inevitability that vehicles, factories and homes that are no longer powered by fossil fuels will certainly arrive soon, it would on the face of it be surprising that oil is making such an incredible resurgence.

However, propaganda is all it is, and whilst some highly advanced Western countries such as Sweden are ultra-clean and there has been a well-engineered shift toward green energy without seeing the country’s prime minister grinning and wearing a banal lab suit when not qualified as a scientist, there are many pretenders, and many users of good old crude oil without attempting to disguise it.

Whilst those very elbow-bumping, lab suit-wearing, grinning G7 politicians keep the lockdown charade going, the highly industrious Asia Pacific region is hard at work and has been for the past 16 months whilst the populations of many European nations have been told to hide behind their sofa at the same time as being told that by merely existing they are ‘killing the planet’ to the extent that there is a ‘climate emergency’.

A quick trip on a standard, kerosene-fuelled plane to Singapore, mainland China, Japan, Indonesia, Taiwan, India, Malaysia, Vietnam or Thailand, all of which make up the region of the world where the majority of the world’s population resides, would demonstrate that the hive of industrious activity in that region is at an all-time high, with the hard-working producers of pretty much everything in everyday use across the world today going about their daily lives at full speed.

South and Southeast Asia are the world’s largest consumers of oil, and there is no such whimsical climate-related caterwauling from anyone in the region. It’s simply full steam ahead, perhaps in this case full oil ahead.

Yesterday’s abandonment of its meeting without a deal by the OPEC+ nations has been sensationalized across the mainstream media.

The attempts to resolve an internal dispute between two sheikdoms is really not the crux of the matter at all, and the oil market is still absolutely rocketing in general, something it has been doing for a few weeks.

The feudal ideology that unless an agreement can be salvaged, the OPEC+ Countries and its allies won’t increase production for August thus depriving supplies is old hat really.

The greenwash that is everywhere now on Western channels is quite simply that – greenwash. Oil demand is relevant.

A few weeks ago, Goldman Sachs analysts said that we would see the $80 oil barrel very soon, and at the time that appeared outlandish, yet here we are at $76 per barrel for crude oil.

Whilst there is a lot of infighting within the OPEC+ countries, we have to consider that Russia, which despite sanctions enforced by many Western nations, has been opening its pipeline to the United States recently. Russian Deputy Prime Minister Alexander Novak last month said that with all of the climate clamour that is currently abound and the IEA roadmap, “The price for oil will go to, what, $200?”.

That wouldn’t be a comment made flippantly at all, especially given that Russia’s government never stoops to trends, and that Oil and gas are responsible for more than 60% of Russia’s exports and provide more than 30% of the country’s gross domestic product. Gazprom is the largest publicly listed energy company in the world and the largest company in Russia by revenue, and its products are entirely fossil fuel.

All this, without even going into the absurd activism that is demanding that Big Oil drastically cut emissions and shift strategies to investment in low-carbon energy instead of oil and gas. Of course, clean energy and progress is important, but its highly political and potentially costly!

Goldman Sachs has been almost proven right, and despite the push for alternative and sustainable energy that is all over the Western media, the electric car revolution – 33% of the new cars in Europe and UK are electric or plug in hybrid – demand is still huge for oil.

The US, whose relationship with Russia is very complicated, is a pioneer in electric vehicles, yet it remains the third largest consumer of oil in the world, and Russia is one of its key suppliers.

Therefore, the talks breaking down in the OPEC+ nations of the middle east, added to the rise in sustainable fuels does not affect the fact that oil is in higher demand than ever.

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Climate Activists and IEA’s LaLa-Land Approach to Push Oil Prices Significantly

After a Dutch court forced Royal Dutch Shell to commit to much more stringent climate change and energy transition strategy, US majors ExxonMobil and Chevron also were defeated in their general shareholders meetings.

The American giants were hit by landmark victories of activist shareholders, as the latter gained seats on the board of ExxonMobil and others. With calls on mainstream oil and gas companies, activists and NGOs are trying not only to speed up energy transition strategies worldwide but also force oil majors to cut their production and emissions. The Dutch court case could be a watershed verdict, as the judge ordered not only Shell to cut emissions more than was proposed by the company, but also stated that Shell is responsible for the emissions of all parties in its value chain, which includes suppliers, buyers and consumers.

This activist onslaught on Big Oil was supported by a bombshell report of the International Energy Agency (IEA), Net Zero by 2050. The former oil and gas focused energy agency of the OECD stated bluntly that the world should stop investing in new oil and gas immediately. As expected, mainstream and activist media took all of these developments as a major watershed issue, the end of oil and gas was proclaimed already by some.

Since this media-genic bloodshed scenario, in which the end of Big Oil was proclaimed, some realism has returned in the market. After a short period of silence, the hydrocarbon giants started to react. In addition to the so-called Seven Sisters (IOCs), OPEC member countries already declared the ongoing IEA strategies as flawed, not relevant and having no impact on their own operations. In a reaction to the press, Saudi energy minister Prince Abdulaziz bin Salman stated “”I would have to express my view that I believe it is a sequel of the La La Land movie”.

He also asked the media “why should I take it seriously?” The Saudi official reacted to the statement by the IEA that to reach Net Zero by 2050 that oil supplies have to shrink by 8% per year, reaching 24 million bpd by 2050, in comparison to around 100 million bpd before COVID-19 hit. The Saudi reaction, supported by other OPEC members and Russia, already is proving to be right. Just shortly after its own report, the IEA needed to come out with a statement that global oil demand is showing high growth potential, hitting soon pre-crisis levels.

It seems that activist shareholders and NGOs still don’t understand the pivotal role of oil and gas in the economy. Without any other options, demand is set to grow, hitting soon 100 million bpd levels again, while no peak yet to be expected. Some could even argue that to force IOCs and other listed oil and gas operators to change their strategies and divest major parts of their business to reach Paris Agreements or the EU 55% emission reduction targets is setting up the hydrocarbon sector for a major shakedown and revamp of national oils. In the end, the next decades oil and gas will be needed, especially to stabilize the immense energy transition being implemented.

Without natural gas especially, formerly supported by the IEA as fuel of choice for the energy transition, the global energy system collapses. A major inherent flaw of activists and NGOs worldwide is that they want companies like Shell, Exxon or BP to commit suicide. By forcing them to sell assets, their specific emissions will be going down, but overall the vacuum created in the market will be filled by others. The “Others” are either private equity companies, which are not listed so no 3rd party influence, or national oils.

The latter, even acknowledged by the IEA, are looking at a very bright future. Removing production of IOCs will be not lost forever, but change into the hands of others. Supply however could be partly hampered, or politically influenced in future. Stability of hydrocarbon markets is needed, not only to commit to a sustainable economic future, but also to have the financial powers to put energy transition powers in place. The Seven Sisters will not be able to implement the major new green investments without having access to capital. Without high revenue levels from oil and gas, no options will be available to commit to lower risky projects such as offshore wind, solar or hydrogen.

In the short to mid-term, instability will be increasing substantially. Major new oil and gas projects, needed to even keep current demand-supply in check, are being threatened. If IOCs are leaving the market even more, consumers and industry will be at the mercy of private equity production parties or geopolitically instigated national oil companies. The latter two’s main strategy will be to maximize revenues, not to maximize production. Further price increases will be the result, which ever new party is owner of the fields and reserves.

For energy transition goals, higher oil prices are not the solution, as margins will attract investments, especially in a financial system looking at a glut of options. Renewables should be opting for higher production while removing demand, the latter would result in lower prices and less market interest. The current move is a Pyrus victory in Lala-land. Demand is growing, prices are still not high enough to constrain economic growth.

With oil prices at $70-80 per barrels, supply will be available but now regulated by out-of-reach parties for activists. Setting up IOCs to fall is reaping higher oil prices and continuing investments, whatever Western financials are stating. Current Green Washing accusations will now be based on upward pressure on US Dollar (Greenback) levels. Activists are clearly unknowingly pushing the world to higher prices, with geopolitically constrained supply options.

Shell to Step Up Energy Transition After Landmark Court Ruling

By Ron Bousso

Shell plans to appeal the May 26 court ruling that ordered it to reduce greenhouse gas emissions by 45% by 2030 from 2019 levels, significantly faster than its current plans.

But the court ruling applies immediately and cannot be suspended before the appeal, van Beurden said in a LinkedIn post https://www.linkedin.com/pulse/spirit-shell-rise-challenge-ben-van-beurden.

“For Shell, this ruling does not mean a change, but rather an acceleration of our strategy,” van Beurden said.

Shell shares were up 0.8% at 1346 GMT compared with a 0.4% gain in the broader European energy index.

Earlier this year, Shell set out one of the sector’s most ambitious climate strategies. It has a target to cut the carbon intensity of its products by at least 6% by 2023, by 20% by 2030, by 45% by 2035 and by 100% by 2050 from 2016 levels.

“Now we will seek ways to reduce emissions even further in a way that remains purposeful and profitable. That is likely to mean taking some bold but measured steps over the coming years.”

The court ruling called for Shell to cut its absolute carbon emissions, a move van Beurden had previously rejected because it would force Shell to scale back its oil and gas business, which account for the vast majority of its revenue.

Shell currently plans to increase its spending on renewables and low carbon technologies to up to 25% of its overall budget by 2025.

Analysts have said the ruling could lead to a 12% decline in the company’s energy output, including a sharp drop in oil and gas sales.

The court case came shortly after the International Energy Agency said in a report that investments in new fossil fuel projects should stop immediately in order to meet U.N.-backed targets aimed at limiting global warming.

Shell, which is the world’s top oil and gas trader, has said its carbon emissions peaked in 2018, while its oil output peaked in 2019 and was set to drop by 1% to 2% per year.

The ruling by the court in The Hague, where Shell is headquartered, could trigger action against energy companies around the world.

But van Beurden repeated his call for governments and companies to tackle oil and gas consumption around the world, and not only supply.

“Imagine Shell decided to stop selling petrol and diesel today. This would certainly cut Shell’s carbon emissions. But it would not help the world one bit. Demand for fuel would not change. People would fill up their cars and delivery trucks at other service stations,” van Beurden said.

“A court ordering one energy company to reduce its emissions – and the emissions of its customers – is not the answer,” he added.

(Reporting by Ron Bousso, editing by Louise Heavens, Kim Coghill and Elaine Hardcastle)

Dutch Court Orders Shell to Deepen Carbon Cuts in Landmark Case

By Bart H. Meijer

At a court room in The Hague, judge Larisa Alwin read out a ruling which ordered Shell to reduce its planet warming carbon emissions by 45% by 2030 from 2019 levels.

“The court orders Royal Dutch Shell, by means of its corporate policy, to reduce its C02 emissions by 45% by 2030 with respect to the level of 2019 for the Shell group and the suppliers and customers of the group,” Alwin said.

Shell currently has a target to reduce the carbon intensity of its products by at least 6% by 2023, by 20% by 2030, by 45% by 2035 and by 100% by 2050 compared with 2016 levels.

But the court said that Shell’s climate policy was “not concrete and is full of conditions…that’s not enough.”

“The conclusion of the court is therefore that Shell is in danger of violating its obligation to reduce. And the court will therefore issue an order upon RDS,” the judge said.

The court ordered Shell to reduce its absolute levels of carbon emissions, while Shell’s intensity-based targets could allow the company to grow its output in theory.

The lawsuit, which was filed by seven groups including Greenpeace and Friends of the Earth Netherlands, marks a first in which environmentalists have turned to the courts to try to force a major energy firm to change strategy.

It was filed in April 2019 on behalf of more than 17,000 Dutch citizens who say Shell is threatening human rights as it continues to invest billions in the production of fossil fuels.

“This is a huge win, for us and for anyone affected by climate change”, Friends of the Earth Netherlands director Donald Pols told Reuters.

“It is historic, it is the first time a court has decided that a major polluter has to cut its emissions,” Pols added after the verdict, which Shell can appeal.

Shell, which is the world’s top oil and gas trader, has said its carbon emissions peaked in 2018 and that its oil output peaked in 2019 and was set to decline by 1% to 2% per year.

However, the Anglo-Dutch company’s spending will remain tilted towards oil and gas in the near future.

A rapid reduction would effectively force the firm to quickly move away from oil and gas.

Shell, which plans to achieve net zero carbon emissions by 2050 or sooner, said ahead of the ruling that court action will not accelerate the world’s transition away from fossil fuels.

(Reporting by Bart Meijer; Writing by Ron Bousso and Shadia Nasralla; Editing by Elaine Hardcastle and Alexander Smith)

FTSE 100 Rises on Commodity Stocks, Jobs Data Boost; Oxford Biomedica Jumps

By Devik Jain

The blue-chip index rose 0.5%, with precious and base metal miners adding more than 1% each, as they benefited from higher metal and gold prices. [MET/L] [GOL/]

Oil majors BP and Royal Dutch Shell, and banking stocks also rose, providing the biggest boost to the index.

The domestically focussed mid-cap FTSE 250 index climbed 0.7%.

Britain’s unemployment rate fell again, to 4.8% between January and March, and hiring rose further in April, according to data that showed employers gearing up for the easing of curbs.

“It is a general return to a bit of risk-on in the markets out there. We have some data out of the UK and several countries in Europe easing their restrictions have contributed to a general sense that the reopening is underway and that will boost cyclical stocks in particular,” said Simona Gambarini, a markets economist at Capital Economics.

The FTSE 100 has gained nearly 9.4% year-to-date as investors flocked to energy, materials and banking stocks that are seen benefiting the most from a stronger economic recovery due to speedy COVID-19 vaccinations and government support.

Fund managers loaded up on UK stocks and cut exposure to technology stocks as rising inflation and “taper tantrum” fears leave growth stocks vulnerable to pullbacks, Bank of America’s May fund manager survey released on Tuesday found.

Among other stocks, Oxford Biomedica gained 6% after it doubled the revenue expectation from its COVID-19 vaccine supply deal with drugmaker AstraZeneca.

Imperial Brands rose 2.1% after the tobacco company reiterated its full-year outlook.

Mobile operator Vodafone Group slipped 6.9% on reporting a 1.2% drop in annual adjusted earnings, as COVID-19 hit roaming revenue and handset sales.

(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V)

Europe’s Oil Majors Leave Pandemic Blues Behind

By Shadia Nasralla

Last year’s demand collapse forced BP, Royal Dutch Shell and Equinor to slash their dividends and preserve cash as they to try to transform themselves into companies that can thrive in a low-carbon world.

With benchmark oil prices recovering from an April 2020 low of $16 a barrel to about $67 a barrel this month, most of the companies managed to drive profits back above levels seen before the coronavirus pandemic first struck.

BP’s first-quarter headline profit figure of $2.6 billion exceeded its first-quarter profit of $2.4 billion in 2019 and was more than 200% higher than in 2020.

France’s Total reported headline profits of $3 billion in the first three months of 2021, up 69% from last year and 9% above the first quarter of 2019.

Norway’s Equinor, meanwhile, came in with a first-quarter profit of $5.5 billion on Thursday, also exceeding its pre-pandemic profit of $4.2 billion.

Shell’s first-quarter profit climbed 13% from last year to $3.2 billion though that was still below 2019’s $5.3 billion.

But despite recovering profits, payouts were still below pre-pandemic levels with the exception of Total, which had kept its dividend steady throughout the pandemic.

“(Total’s) dividends are held flat but the buyback question will now arise given the sub 20% gearing (debt-to-equity ratio),” Bernstein analysts said.

While Shell has increased its dividend twice in the past six months, the 17.35 cents it paid per share in the first quarter was below the 47 cents it paid out before the pandemic.

Shell, which is set to increase its dividend by 4% next year, has flagged share buybacks once its debt falls to $65 billion which Barclays and Bernstein say is possible this year.

Equinor also raised its payout to 15 cents per share, but again this was short of 2019’s 26 cents per share.

“The suggestion is that capital is being preserved to allow for an acceleration of new energy investment,” Citi said.

BP’s 3.8 pence per share first-quarter dividend was about half of what it paid in 2019. However, it is starting share buybacks which analysts expect to increase in the third quarter.

“BP should be able to buy back at least $10 billion between 2021 and 2025,” said analysts at Jefferies.

Spain’s Repsol reported a 5.4% rise in first-quarter adjusted net profit to 471 million euros, though this was 24% below earnings in the first three months of 2019.

It decided in November to cut its 2021 and 2022 cash payouts to 0.60 euro from 1 euro per share, but said share buybacks could push returns above 1 euro per share by 2025.

(Reporting by Shadia Nasralla; Additional reporting by Nerijus Adomaitis, Isla Binnie and Benjamin Mallet; Editing by David Clarke and Elaine Hardcastle)

Shell Raises Its Dividend as Profits Surge

By Ron Bousso and Shadia Nasralla

LONDON (Reuters) -Royal Dutch Shell’s profits leapt to $3.23 billion in the first three months of the year and the energy company raised its dividend as planned but warned that the outlook remained uncertain due to the coronavirus pandemic.

Shell’s adjusted earnings were above an average analyst forecast of $3.125 billion and also ahead of earnings of $2.9 billion last year, boosted by assets sales as well as higher oil and liquefied natural gas (LNG) prices, it said on Thursday.

Sales of oil and gas assets in countries including Nigeria, Canada and Egypt added $1.4 billion to first-quarter profits.

Shell’s London-listed shares were up 1.2% at 0736 GMT, outperforming a 1% gain for the broader European energy index.

“The quarter proves without doubt that Shell’s earnings power is intact,” Bernstein analyst Oswald Clint said in a note.

Shell said its fuel sales fell 13% in the first quarter due to further lockdown measures and the impact of a Texas storm in February, saying there was still “significant uncertainty” over the outlook for demand in the second quarter.

The Anglo-Dutch company raised its dividend by 4% as planned, the second increase since its slashed its payout by two-thirds at the start of last year due to the coronavirus pandemic.

Shell’s cash flow from operations, a key performance metric, rose to $8.3 billion from $6.3 billion, helping to reduce its debt to $71.3 billion.

Shell wants to get its net debt below $65 billion before starting to repurchase shares, part of its strategy to shift to low-carbon energy in the coming decades.

Norway’s Equinor also raised its dividend and posted a rise in first-quarter profits on Thursday.

Shell’s oil and gas trading operations, the world’s largest, did not boost revenue significantly in the quarter, unlike rival BP which reported “exceptional” revenue on Tuesday from its natural gas trading business.

Shell said its LNG trading was significantly below average in the quarter as a result of credit provisions following the storm in Texas, which triggered a massive state power failure and left millions of people without light, heat and water.

Shell’s fuel sales fell in the first quarter to 4.16 million barrels per day (bpd) but were expected to rise to an average of 4.5 million bpd in the second quarter.

Oil and gas production at Shell’s upstream operations fell 9% from a year ago to 2.46 million barrels of oil equivalent per day (boed) due to maintenance and disposals.

Output was forecast to decline again to 2.25 million boed in the second quarter due to lower seasonal gas demand and further asset sales.

(Reporting by Ron Bousso; Editing by David Clarke)

Shell Expects at Best Steady Fuel Sales for First Quarter

By Shadia Nasralla

Shell said it saw refined oil product sales at 3.7-4.7 million barrels per day (bpd) for the first quarter compared with just under 4.8 million bpd in the last quarter of 2020.

Shell’s refining margins have improved to around $2.6 per barrel in the quarter from $1.6 in the previous quarter.

In liquefied natural gas business (LNG) trading, where it is a global leader, Shell said it expected results to be “significantly below average”.

Shell sees its first-quarter LNG production at 7.8-8.4 million tonnes, compared with 8.2 million in the previous quarter.

Total upstream production was expected to rise to 2.4-2.48 million barrel of oil equivalent from 2.37 million in the fourth quarter of 2020.

An extreme cold snap in Texas is expected to have shrunk its output by 10,000-20,000 bpd and to shave up to $200 million from its adjusted first-quarter earnings, due to be reported on April 29.

Benchmark crude prices in the first quarter rose around 24% and were trading near $63 a barrel on Wednesday.

(Reporting by Shadia Nasralla; Editing by Andrew Heavens)