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From Covid-19 to climate: what’s next after the global oil and gas industry crash? – The Guardian

While oil and gas is not alone in struggling in the economic slump, the reality of the climate crisis is starting to bite, analysts say

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The global oil and gas industry has crashed. In mid-June, BP formerly British Petroleum slashed the value of its assets by US$17.5bn and revealed plans to cut its workforce by 15%. It forecast the price of oil would be a third lower than expected for decades to come and said it may be forced to leave new fossil fuel discoveries in the ground.
It was later joined by Royal Dutch Shell, which announced its own US$22bn writedown, with its vast gas business including major liquefied natural gas (LNG) developments in Australia expected to take the heaviest toll.
Wood Mackenzie, a global energy research and consultancy group, says the fall in value is industry-wide, estimating US$1.6tn has been wiped from the sector this year, with more to come.
While oil and gas is not alone in struggling in the face of biggest economic slump in nearly a century, WoodMac says its carnage cannot solely be blamed on Covid-19. The economic reality of the climate crisis is also starting to bite.
Its about fundamental change hitting the entire oil and gas sector, WoodMacs vice-president for corporate analysis, Luke Parker, said.
Just a few years ago, few within the oil and gas industry would even countenance ideas of climate risk, peak demand, stranded assets, liquidation business models and so on. Today, companies are building strategies around these ideas.
If that reflects the global picture, the story among Australias oil and gas businesses which until recently have been enjoying booming growth selling LNG to Asia, and driving most of the increase in national greenhouse gas emissions is less clear.
The idea of stranded assets due to climate change is not new. It suggests carbon-intensive projects potentially worth trillions risk becoming next-to worthless stranded if investors abandon them in favour of emissions-free technology, as required to meet the goals of the Paris climate agreement.
In Australia, the risk is recognised by the countrys major financial institutions and regulators, and has increasingly become a focus of shareholders. Earlier this year they gave resolutions calling for climate action and transparency at oil and gas companies Woodside Energy and Santos more than 50% and more than 40% support, respectively. Activist shareholders are not persuaded by suggestions support for gas is justified as it emits less than coal when burned, and point to studies suggesting it may release more emissions than previously thought.
Double-whammy effect
On coal, where the concept of climate risk is increasingly accepted, Australias second-largest superannuation fund, First State Super, last week announced it would divest from any company that earns more than 10% of revenue from thermal coal mining. It followed an earlier, similar statement by Hesta, and three of Australias four major banks promising to soon stop supporting thermal coal.
But the possibility of major assets being stranded is only occasionally acknowledged across politics, media and the industry. The federal resources minister, Keith Pitt, responded to First State Supers announcement by saying it was mystifying that a fund would deny its members a solid and attractive investment opportunity in coal based on misguided ideology.
Australian oil and gas companies have been hurt by the shutdown, with decisions on more than $80bn of new LNG projects put on hold and Oil Search this month laying off a third of its workforce. But the local industrys public position on what the future holds differs from its competitors in Europe.
In response to questions about Shell and BPs writedowns, the Australian Petroleum Production and Exploration Association (Appea), representing oil and gas producers, did not mention climate risk.
Andrew McConville, Appeas chief executive, said Covid-19 and the ongoing low oil price were having a double-whammy effect and that it would remain an incredibly challenging time for the sector even after the broader economy began to recover. But he said the industry was accustomed to cyclical commodity prices and would be here for the long term.
Energy demand, and oil demand with it, will recover as travel restrictions are eased and economic activity resumes over time, McConville said. The right regulatory and fiscal policy settings will help ensure that Australia remains a competitive destination for oil and gas investments into the future.
The Morrison government agrees, having backed the idea of a gas-fired recovery from coronavirus after a drop in domestic gas prices. Its National Covid-19 Coordination Commission, led by the former Fortescue Metals executive Nev Power, has focused on gas-related recommendations.
Neither the government nor the commission has explained how lower gas prices would encourage increased private investment unless it is backed by substantial public support. Even if that were in the offing, analysts believe maintaining low prices would be a pipe dream given production costs in new Australian gas fields are recognised to be high.
This, in part, is what is driving the push to install gas import terminals along the Australian east coast. While it may seem ridiculous to starting buying fossil fuels from overseas while the country mines huge amounts for export, experts believe it may be the cheapest gas option if the Morrison government and industry are determined to back new gas infrastructure rather than accelerate a switch to cheaper renewable energy.
Big investors may ultimately drive change
Analysts and investor representatives say it is still unclear how much weight climate risk will be given in oil and gas investment decisions in Australia in the short-to-medium term.
Zoe Whitton, the head of ESG research with the financial services multinational Citi, says Australias outlook is arguably different to some other oil and gas producers as it mostly extracts gas, not oil. It also mostly sells to north Asian countries, where investment patterns are less clear and have been interpreted as backing both fossil fuels and renewable energy.
It means that compared to Europe, views on gas still range from it being seen as a legitimate transition fuel to any support for it being clearly at odds with where the rest of the world is pulling. Whitton says investors are increasingly, but not uniformly, in the latter camp.
Gas may be a transition fuel for some regions, but not at any price and not forever
Zoe Whitton
The local

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Alliance pounces on planes deal, buying 14 Embraer jets – The Australian

A $111m deal done entirely over the internet will see Brisbane-based airline Alliance take delivery of 14 Embraer E190 jets from September.

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A $111m deal done entirely over the internet will see Brisbane-based airline Alliance take delivery of 14 Embraer E190 jets from September.
The seemingly COVID-resistant carrier raised the funds in an institutional placement and share purchase plan in June after seeing the opportunity to expand its fleet at a good price in the current pandemic.
Alliance managing director Scott McMillan said the second-hand jets from Azorra Aviation in the US were previously operated by Panama’s Copa Airlines,…

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‘Disgusting’: Woman’s photo at Woolworths checkout sparks debate – Yahoo News Australia

A Woolworths customer accused the shopper in front of her of ‘hoarding’ but people quickly came to the defence of the woman’s large purchase.

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A Woolworths customer has lashed out at another shopper, describing her as a hoarder for her enormous grocery shop in a Victorian store.
A customer wrote on the Woolworths Facebook page on Sunday they were disappointed and angry when the woman spent about $1200 at a store in Highett, in Melbournes southeast.
Her items included about 15 trays of mince. So, so selfish, the customer wrote just before the supermarket reinstated purchase limits in the state.
The post was accompanied by an image of…

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Solomon Lew decries government ‘inaction’ as retail shutdown announced – Sydney Morning Herald

Billionaire retailer Solomon Lew has hit out against new limits on retail trade in Victoria, accusing the Andrews government of causing unnecessary damage to the economy.

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“We expect significant consequences from the inaction, in particular, vast amounts of cost in federal government stimulus that is going to be required to support the Victorian community through this challenging period.”
Major retailers such as Harvey Norman, JB Hi-Fi, Officeworks and David Jones, which traded through the first and second lockdowns in the state, will now be required to shut their doors for the next six weeks due to the rule changes.
Supermarkets, liquor stores, newsagents, fuel…

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