ExxonMobil Considers Canceling Major Oil and Gas Development Plans Amid Low-Carbon Transition Pressure

"Opposition from Activist Directors and Pressure from Environmentalists and Managers"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] ExxonMobil, one of the world's largest energy companies, is reportedly discussing the cancellation of major fossil fuel development plans.

The Wall Street Journal (WSJ) reported on the 20th (local time), citing sources, that during a board meeting discussing ExxonMobil's spending plans for the next five years, disagreements arose over the Mozambique and Vietnam natural gas projects.

These two projects are key parts of the energy expansion plan announced by ExxonMobil CEO Darren Woods about four years ago.

At that time, Woods declared an investment of $230 billion (approximately 270.4 trillion KRW), aiming to increase oil and gas production by 1 million barrels per day by 2025.

The ExxonMobil board's review of business changes is interpreted as a response to growing concerns about climate change and the strong momentum toward green energy transition.

WSJ reported that investors are pressuring ExxonMobil to curb fossil fuel investments to reduce carbon emissions that accelerate climate change and to increase shareholder returns. As a result, board members are weighing the fate of future projects.

Darren Woods, CEO of ExxonMobil
Photo by AP News

WSJ explained that not only investors but also environmentalists and some officials are pressuring ExxonMobil to reduce oil and natural gas production.

The cost of the Mozambique project amounts to $30 billion (approximately 35.3 trillion KRW), and the Vietnam project is estimated to cost several billion dollars (several trillion KRW).

At this board meeting, where the future direction of these projects was discussed, new directors, including three appointed by the activist fund involved in management, actively voiced their opinions.

The activist fund 'Engine No. 1,' which entered ExxonMobil's board through a shareholder vote in May this year, points out that ExxonMobil lacks a consistent strategy to transition to low-carbon fuels amid growing climate change concerns.

WSJ reported that although ExxonMobil's board plans to vote on the five-year plan by the end of this month, it is uncertain whether the fate of the Mozambique and Vietnam projects will be decided.

Meanwhile, ExxonMobil is expected to announce within weeks a plan to increase investment in low-carbon sectors by several billion dollars.

In February this year, ExxonMobil committed to investing $3 billion (approximately 3.5 trillion KRW) by 2015 to commercialize technologies such as carbon capture and storage, hydrogen power, and bioenergy.

However, analysts point out that these businesses may not be highly profitable without significant public policy support or technological advances.

This content was produced with the assistance of AI translation services.