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Exxon Mobil of the corporation XOM 0.55% According to people familiar with the matter, the board of directors is debating whether to continue with several major oil and gas projects as the company rethinks its investment strategy in the rapidly changing energy landscape.

board members— which includes three directors and two other new members successfully nominated by an active investor in May — has expressed concerns about some of the projects, including a $30 billion liquefied natural gas development in Mozambique and another multi-billion in Vietnam. Dollar’s gas project is involved, the people said.


oil and gas Prices are at many-year highs, and the world faces fossil fuel shortages as economies recover from the pandemic. But such energy megaprojects take years to produce the additional supply, and the investment in subsequent years to pay off.

Exxon board members are weighing the fate of future projects as the company faces pressure from investors to halt fossil-fuel investments to limit carbon emissions and return more cash to shareholders. environmentalists and some government officials are also Pressuring the company to produce less oil and gas.

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The discussions are taking place as part of a review of the oil company’s five-year spending plan, which the board is set to vote on later this month, people said. According to the people, it is not clear whether the board will make a final decision on Mozambique or Vietnam projects during the current review.

Both projects face potential political hurdles, and some Exxon board members have expressed concerns about whether they will return billions in upfront investments, some said. People said that the board meetings have been cordial.

Exxon said it does not discuss internal board deliberations. “It is wrong to paint the board’s discussion as less than constructive in tone or essence,” said Axon spokeswoman Casey Norton.

As part of the review, Exxon is analyzing the expected carbon emissions from each project and how they will affect the company’s ability to deliver on its promises to reduce emissions, people familiar with the matter said. Annual projected emissions from Mozambique and Vietnam projects were among the highest in Exxon’s planned pipeline of oil and gas projects, according to a pre-pandemic internal analysis by Exxon seen by The Wall Street Journal.

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Mr Norton said the analysis of projected carbon emissions seen by the Journal was several years old and did not include the impact of Exxon’s most recent emissions reduction plans and other Covid-19 changes.

People familiar with the matter said discussions on the projects represent a new dynamism for Exxon’s board.

Engine No. 1, the hedge fund that led the campaign to replace three Exxon board members earlier this year, argued that Exxon was investing in low-return projects and low-carbon fuels amid growing concerns about the climate. lacked a coherent strategy for charting a transition to Change.

Worker was successful in part because it was able to win support from some of the company’s biggest investors, including black Rock Inc. and Vanguard Group. Asset managers said one of the reasons they supported the engine candidates was that Exxon’s board lacked energy expertise and independence.

Gregory Goff, one of the Engine No. 1 nominees, is one of the directors raising doubts about the Mozambique project, people familiar with the matter said. Mr. Goff, former chief executive of Endeavor, which was the largest US refiner before being bought by Marathon Petroleum The corporation said Exxon should look more closely at the risks posed by the project to assess whether it justifies the investment, the people said.

The Mozambique project, called Rovuma, will tap vast reserves of natural gas off the southern African country’s coast, then cool them to a liquid state at an onshore plant to be exported around the world. It is one of the largest projects in Exxon’s portfolio, and its proximity to India could give Exxon an opportunity to export gas to a rapidly growing market.

But Mozambique lacks infrastructure and is fighting an Islamic State-linked insurgency that has killed more than 3,000 people. total energy SE had halted construction of a $20 billion gas project in March after violence broke out near its construction site. Exxon spent $2.8 billion to acquire a stake in the Rovuma project, but delayed the final investment decision for several years. Exxon has not disclosed an exact estimate of the cost of the project; Mozambique has estimated it at $27 billion to $33 billion.

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In Vietnam, Exxon and its colleagues discovered a large gas field in water 50 miles off the coast in 2011, but have yet to develop it. Gas from the field, known as Ca Voi Xanh or Blue Whale, will be sent via a pipeline to planned onshore power plants. Vietnamese officials have said the project will generate $20 billion in government revenue. The area is near disputed waters claimed by China in the South China Sea, and analysts say China is actively disrupting Vietnam’s offshore oil and gas industry, adding geopolitical complications to the project. .

The abandonment of the projects would represent another pullback from previous plans by Exxon chief executive Darren Woods to boost spending to increase production. Less than four years ago, Mr. Woods said the company would invest $230 billion to pump an additional one million barrels a day of oil and gas by 2025. Rovuma in particular was at the heart of that strategy. company cut expenses Oil and gas demand slumped last year after the pandemic said it was chasing higher returns rather than production growth.

Exxon’s fortunes have improved this year with rising oil and gas prices. Analysts expect Exxon to report more than $6 billion in quarterly profit later this month, after a $680 million loss during the same period last year. The company has said it would prefer using cash to pay debt and fund dividends.

According to people familiar with the matter, Exxon plans to announce in the coming weeks that it will increase its investment by billions of dollars in the low-carbon unit it announced in February. It initially said it would invest $3 billion in the unit by 2025 to commercialize carbon capture and storage, hydrogen, biofuels and other technologies. Analysts say most of those businesses are not profitable, and require significant public-policy support and technological advances to become so.

Exxon is also considering a pledge The Journal reports that to reduce and offset carbon emissions from its operations to zero by 2050. Mr Woods has previously said that if companies want to achieve net-zero commitments simply by selling oil reserves to their counterparts, it amounts to “beauty competition”.

This article first appeared in The Wall Street Journal