Reliance Industries’ much-discussed sale of 20% of its oil-to-chemicals (O2C) business to Saudi Aramco may have stalled over Aramco’s insistence that Reliance re-evaluate the asking price of US$75 billion post Covid’s battering of the oil market. The potential deal was first announced last year and the sale would include the firm’s twin refineries at Jamnagar (Gujarat), its petrochemical plants and 51% of its fuel retailing business.
Aramco, however, is no longer certain of the returns from the businesses as they would need substantial capital investment to be turned into facilities that only focus on O2C, as demand for petrol, diesel and aviation fuel has fallen after the Covid-19 pandemic. But Reliance Industries chairman Mukesh Ambani has announced that after a successful rights issue of US$7 billion last month, its net debt has fallen to zero and it’s therefore not keen on the Aramco deal going through.
$20 billion LNG project okayed in Mozambique by seven financiers, including Japan
A $20 billion LNG project in Mozambique by French oil giant Total to extract, liquify and export the fuel — Africa’s biggest energy project ever — has been okayed for funding by seven countries: the US, Japan, Netherlands, UK, Italy, Vietnam and South Africa. The project has secured funding in the hopes of future profits expected from a global shift towards natural gas as a cleaner alternative to coal, with the US export-import bank making $5 billion available. Even the African Development Bank is financing the project, despite criticism by environmentalists on what it would mean for a continent already vulnerable to climate change.
The Japan Bank for International Cooperation, too, will shell out $3 billion, even as Japan has vowed to slash funding for coal in the developing world after mounting criticism.
Also, according to the 2019 Production Gap Report, governments investing in natural gas plan to extract 47% more of the fuel than can be burned under the 2°C global warming limit. The deal exposes the double standards of some of the funders’ climate policies as well, such as the UK’s, which is rapidly progressing towards a zero carbon economy within its borders but continues to finance fossil fuel projects around the world.
Big Oil announces cleverly crafted joint carbon reduction target
The world’s biggest oil and gas drillers have together released a joint target to reduce their operations’ carbon intensity to 20-21 kg of CO2 equivalent per barrel of oil equivalent by 2025 — as a proportion of their output. This is down from 23kg of CO2e/boe in 2017. However, the target means that the sector’s absolute emissions can go on rising, since steady expansion of oil and gas operations is still being planned.
The target is borne out of an agreed methodology that’s common to all, and could be extended to LNG and refining operations in the future. A significant member amongst the signatories in ExxonMobil, which has so far resisted shareholders’ calls to increase ambition on climate action, and is yet to release its carbon emission figures for 2019.