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Shell and other oil companies skating on ever thinner ice as climate change and Covid-19 push them to adapt

Posted by Warwick Business School at 04 February 2021, 21:03 CET |
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Royal Dutch Shell has posted losses of $21.7billion (£16billion) for 2020. Earlier this week, BP and Exxon posted similar losses. David Elmes, Professor of Practice and Head of the Global Energy Research Network at Warwick Business School, said:

"This week's huge losses by Shell, BP and Exxon reflect the challenges oil and gas companies face. They are skating on ever-thinning ice as the effects of climate change combine with other events like the covid-19 pandemic.

"A face-off between the world's biggest oil and gas suppliers in 2015 caused prices to halve and they had barely recovered before Covid-19 caused a slump in demand. Worse still, that slump in demand as a result of the pandemic has become more prolonged than initially hoped.

"There will be some ongoing need for oil and gas as a fuel for a while yet. There will also be demand for the petrochemicals and other products made from them. But that can't sustain the industry we've seen in the past as we look to address climate change. Some companies will need to change to survive.

"International oil and gas companies like Shell, BP & Exxon own less of the world's resources than similar companies owned by governments in the countries where the oil and gas are found. They are getting squeezed and need a way out.

"Companies like BP and Shell know this and have plans in place, such as BP's plan to become an integrated energy company.  Shell is due to announce its plan later this month.  The energy transition needed to address climate change is getting a significant push from Covid-19."

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