BAKU, Azerbaijan, Jan.11
By Leman Zeynalova – Trend:
It is increasingly likely that massive LNG projects such as the Browse processing plant in Western Australia, which still has government backing, will be abandoned for fear of creating stranded assets, Trend reports with reference to Westwood Global Energy Group.
The same goes for investments in sour gas, oil sands and the like, where growing costs for reducing emissions could significantly dent the viability of projects, according to the company.
“The shock exit of Shell from the UK’s Cambo project highlighted the delicate balance between achieving desired returns and meeting increasingly stringent environmental standards. The climate checkpoint concept currently under consultation will further raise the importance of the oil and gas sector meeting the UK’s climate objective to reduce emissions to net zero by 2050,” reads the latest report released by Westwood Global Energy Group.
The company notes that ExxonMobil’s 2021 decision to pause a final investment decision on a $30 billion liquified natural gas (LNG) project in Mozambique until this year also highlighted the complexities associated with projects in emerging markets.
“The company’s Cabo Delgado plans were initially put on hold because of security concerns. But local insurgencies are not the only threat facing the LNG project. Amid growing calls for emissions reduction, ExxonMobil has promised it will add carbon capture and storage (CCS) to the installation—and to afford it, the company needs to bring down the total cost. Going forward, it is unclear to what extent projects such as Cabo Delgado will need to include CCS as standard, or whether emissions could be cancelled using carbon offsets in the same way some players are trying to do with so-called green barrels of oil,” says the report.
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