Oil and gas industry officials tell of ‘climate backlash’

Despite holding over half the world’s oil and gas reserves, the Middle East and North Africa region is responsible for just a third of oil production and a sixth of gas, as the industry struggles to stay competitive. (AFP)
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Updated 19 December 2019

Oil and gas industry officials tell of ‘climate backlash’

  • Concerns about climate change are 'causing the energy sector to be unfairly maligned'
  • 'Carbon emissions will continue' as long as Asian keeps building coal-fired power stations

DUBAI: Signs are starting to emerge of a backlash against the oil and gas sector for its contribution to global warming, putting the industry at risk of being labeled the “new Big Tobacco,” according to prominent energy industry figures.

Majid Jafar, CEO of Crescent Petroleum, the region’s first and largest privately owned oil and gas company, made the observation while taking part in a panel discussion on Tuesday at the SALT conference in Abu Dhabi.

Speaking as someone who was “proud to work in an industry that has transformed human standards of living over the last century,” Jafar said the oil and gas sector was being “unfairly maligned,” especially with the advent of electric vehicles, and that its role was being “misconstrued” by activists and the press.

Citing figures from the International Energy Agency (IEA), he added: “While many people are focusing on electric cars, the reality is that natural gas substituting for coal has had 100 times greater impact in lowering emissions over the last five years than the 5 million electric cars today.”

Jafar advised the public to “go beyond the headlines” in order to understand the bottom line of the impact the industry is having on climate change.

While he supports young people in the West trying to campaign and draw attention to the threat of climate change, he said carbon emissions would continue, and might increase, as long as Asia keep on building coal-fired power stations.

In the current scenario, any efforts by the West to curb carbon emissions would be akin to “rearranging the furniture in a bedroom while the living room is on fire,” he said, adding that the climate crisis is in need of global action.

Jafar’s concerns were amplified by David Darst, chief investment officer at The Family Office, who said in a separate session at the SALT conference that the oil sector has been “tobaccoized.”

Discussing the challenge of “managing change in a time of digital transformations,” Darst said it was important to understand the difference in the levels of influence commanded by “big data” companies and the largest oil and gas companies.

“The market capitalization of Apple alone is $1.1 trillion. This is equal to the market cap of the entire energy sector of the US, which includes such oil companies as ExxonMobil, Chevron and ConocoPhillips,” he added.

Were Apple to disappear, people would move on to Samsung, Darst said. But if the same happened to ExxonMobil, Royal Dutch Shell and BP, “the world would be on its knees.”

Even so, signs of a backlash against energy companies can be seen in the case of the University of California investment system, Darst said, pointing out that the university, which has a $17 billion endowment and a $70 billion pension fund for its employees, recently took its assets out of hydrocarbon stocks. 

Against this backdrop of mounting challenges, Jafar pointed to developments such as Saudi Aramco’s initial public offering as a new model of partnerships with the private sector that could help the energy industry regain its competitiveness once again.

The Middle East and North Africa region, which holds half of the world’s oil and gas reserves, is responsible for a third of the world’s oil production and a sixth of its gas production, he said.

“We’re punching way below our weight,” Jafar said, adding that over the last decade, the Middle East oil and gas industry had given up a significant amount of its market share to its American counterparts.

SALT, run by Scaramucci, who as well as working at the White House  was also a successful financier, is holding its first conference in the Middle East in partnership with the Abu Dhabi Global Market, aiming to identify global collaboration opportunities in finance, technology and geopolitics.


Big week for Big Tech as earnings, hearings loom

Updated 25 October 2020

Big week for Big Tech as earnings, hearings loom

  • The four giants drawing the most scrutiny — Apple, Amazon, Facebook and Google — have been wildly successful in recent years

SAN FRANCISCO: Big Tech is bracing for a tumultuous week marked by quarterly results likely to show resilience despite the pandemic, and fresh attacks from lawmakers ahead of the Nov. 3 election.

With backlash against Silicon Valley intensifying, the companies will seek to reassure investors while at the same time fend off regulators and activists who claim these firms have become too dominant and powerful.

Earnings reports are due this week from Amazon, Apple, Facebook, Microsoft, Twitter and Google-parent Alphabet, whose combined value has grown to more than $7 trillion.

They have also woven themselves into the very fabric of modern life, from how people share views and get news to shopping, working, and playing.

Robust quarterly earnings results expected from Big Tech will “highlight the outsized strength these tech behemoths are seeing” but “ultimately add fuel to the fire in the Beltway around breakup momentum,” Wedbush analyst Dan Ives said in a note to investors.

The results come amid heightened scrutiny in Washington of tech platforms and follow a landmark antitrust suit filed against Google, which could potentially lead to the breakup of the internet giant, illustrative of the “techlash” in political circles.

Meanwhile, Senate Republicans have voted to subpoena Jack Dorsey and Mark Zuckerberg, the chief executives of Twitter and Facebook respectively, as part of a stepped-up assault on social media’s handling of online political content, notably the downranking of a New York Post article purported to show embarrassing information about Democrat Joe Biden.

CEOs of Twitter, Facebook and Google are already slated to testify at a separate Senate panel on Wednesday examining the so-called Section 230 law, which offers liability protection for content posted by others on their platforms.

The four giants drawing the most scrutiny — Apple, Amazon, Facebook and Google — have been wildly successful in recent years and have weathered the economic impact of the pandemic by offering needed goods and services.

Google and Facebook dominate the lucrative online ad market, while Amazon is an e-commerce king.

Apple has come under fire for its tight grip on the App Store, just as it has made a priority of making money from selling digital content and services to the multitude of iPhone users.

The firms have stepped up lobbying, spending tens of millions this year, and made efforts to show their social contributions as part of their campaign to fend off regulation.

“For the most part, tech companies know how to do this dance,” said analyst Rob Enderle of Enderle Group.

“They don’t spend a lot of time bragging about how well they have done any more.”

Ed Yardeni of Yardeni Research said the outlook for Big Tech may not be as rosy as it appears.

“For one, regulators at home and abroad are gunning to rein in some of the largest US technology names,” Yardeni said in a research note.

Of interest to the market short-term will likely be whether backlash about what kind of content is left up and what is taken down by online titans causes advertisers to cut spending on the platforms.

Economic and social disruption from the pandemic also looms over tech firms, which benefitted early in the pandemic as people turned to the internet to work, learn, shop and socialize from home.

“Performance will be best for those providing solutions for people working at home,” analyst Enderle said.

Amazon, Google and Microsoft each have cloud computing divisions that have been increasingly powering revenue as demand climbs for software, services and storage provided as services from massive datacenters.

Amazon has seen booming sales on its platform during the pandemic, and viewing surge at its Prime streaming television service.

Enderle expressed concern that with the coronavirus disease (COVID-19) cases and a lack of new stimulus money in the US, tech companies could reveal in forecasts that they are bracing for poorer performance in the current quarter.