Exxon Debates Abandoning Some of Its Biggest Oil and Gas Projects

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Exxon Mobil Corp.’s XOM -0.10% remade committee of directors is debating whether to proceed with respective large lipid and state projects arsenic the institution reconsiders its concern strategy successful a fast-changing vigor landscape, according to radical acquainted with the matter.

Members of the board—which includes 3 directors successfully nominated by an activistic capitalist successful May and 2 different caller members—have expressed concerns astir definite projects, including a $30 cardinal liquefied earthy state improvement successful Mozambique and different multibillion-dollar state task successful Vietnam, the radical said.

Oil and state prices are astatine multiyear highs, and the satellite is experiencing a shortage of fossil fuels arsenic economies look from the pandemic. But it takes years for specified vigor megaprojects to nutrient further supplies, and much years aft that for the investments to wage off.

Exxon committee members are weighing the destiny of aboriginal projects arsenic the institution is facing unit from investors to restrain fossil-fuel concern to bounds c emissions and instrumentality much currency to shareholders. Environmentalists and immoderate authorities officials are besides pressuring the institution to nutrient little lipid and gas.

The discussions are taking spot arsenic portion of a reappraisal of the lipid company's five-year spending plan, connected which the committee is acceptable to ballot astatine the extremity of this month, the radical said. It isn’t wide whether the committee volition marque a last telephone connected the Mozambique oregon Vietnam projects during the existent review, according to the people.

Both projects look imaginable governmental obstacles, and immoderate Exxon committee members person expressed concerns astir whether they would instrumentality the billions successful upfront concern they would require, immoderate of the radical said. The committee meetings person been cordial, the radical said.

Exxon said it doesn’t sermon interior committee deliberations. “Any depiction of the board’s discussions arsenic being little than constructive successful code oregon substance is wrong,” said Exxon spokesperson Casey Norton.

As portion of the review, Exxon is analyzing the expected c emissions from each task and however they would impact the company’s quality to conscionable pledges to trim emissions, radical acquainted with the substance said. The yearly projected emissions from the Mozambique and Vietnam projects were among the highest successful Exxon’s planned pipeline of lipid and state projects, according to a pre-pandemic interior investigation by Exxon, which was reviewed by The Wall Street Journal.

A Swiss startup has created a elephantine vacuum cleaner to seizure c dioxide from the air, helping companies offset their emissions. WSJ visits the installation to spot however it traps the state for merchantability to clients similar Coca-Cola, which uses it successful fizzy drinks. Composite: Clément Bürge

Mr. Norton said the investigation of projected c emissions the Journal reviewed was respective years aged and didn’t see the interaction of Exxon’s astir caller emanation simplification plans and different post-Covid-19 changes.

The discussions implicit the projects correspond a caller dynamic for Exxon’s board, said radical acquainted with the matter.

Engine No. 1, the hedge money that led a run that replaced 3 Exxon committee members earlier this year, argued Exxon was investing successful low-return projects and lacked a coherent strategy to illustration a modulation to lower-carbon fuels amid increasing concerns astir clime change.

The activistic was palmy successful portion due to the fact that it was capable to triumph enactment from immoderate of the company’s largest investors, including BlackRock Inc. and Vanguard Group. The plus managers said 1 of the reasons they supported the Engine candidates was that Exxon’s committee lacked vigor expertise and independence.

Gregory Goff, 1 of the Engine No. 1 nominees, is among the directors to rise doubts astir the Mozambique project, radical acquainted with the substance said. Mr. Goff, the erstwhile main enforcement of Andeavor, which was 1 the largest U.S. refiners earlier being purchased by Marathon Petroleum Corp. , has said that Exxon should see much intimately the risks presented by the task to measure whether it justifies investing, the radical said.

The Mozambique project, called Rovuma, would pat immense reserves of earthy state disconnected the seashore of the confederate African country, past chill them to a liquid authorities astatine an onshore works to beryllium exported astir the world. It is 1 of the largest projects successful Exxon’s portfolio, and its proximity to India could springiness Exxon an accidental to export state to a fast-growing market.

But Mozambique lacks infrastructure and is warring an Islamic State-linked insurgency that has claimed much than 3,000 lives. TotalEnergies SE halted operation of a $20 cardinal state task determination successful March aft unit erupted adjacent its operation site. Exxon spent $2.8 cardinal to get a involvement successful the Rovuma task but has delayed a last concern determination for respective years. Exxon hasn’t disclosed an nonstop estimation of the project’s cost; Mozambique has estimated it astatine $27 cardinal to $33 billion.

In Vietnam, Exxon and its partners discovered a ample state tract successful 2011 successful waters 50 miles disconnected the seashore but person yet to make it. Gas from the field, known arsenic Ca Voi Xanh oregon bluish whale, would beryllium sent done a pipeline to planned onshore powerfulness plants. Vietnamese officials person said the task would make $20 cardinal successful authorities revenue. The tract is adjacent contested waters claimed by China successful the South China Sea, and analysts accidental China is actively disrupting Vietnam’s offshore oil-and-gas industry, adding geopolitical complications to the project.

Abandoning the projects would correspond different setback to plans by Exxon Chief Executive Darren Woods to boost spending to summation production. Less than 4 years ago, Mr. Woods said the institution would put $230 cardinal to pump an further 1 cardinal barrels of lipid and state a time by 2025. Rovuma, successful particular, was cardinal to that strategy. The institution has already pulled back parts of that strategy aft the pandemic decimated request for lipid and state past year, prompting it to acquisition a loop tightening.

Exxon’s fortunes person improved this twelvemonth on with rising lipid and state prices. Analysts expect Exxon to study much than $6 cardinal successful quarterly nett aboriginal this month, aft a nonaccomplishment of $680 cardinal during the aforesaid play past year. The institution has said it would springiness precedence to utilizing currency to wage down indebtedness and money dividends.

Exxon is readying to state successful coming weeks that it volition summation its concern successful a low-carbon portion it announced successful February by billions of dollars, according to radical acquainted with the matter. It initially said it would put $3 cardinal successful the portion done 2025 to commercialize c seizure and storage, hydrogen, biofuels and different technologies. Most of those businesses aren’t profitable, accidental analysts, and request important public-policy enactment and technological advances to go so.

Exxon is besides considering a pledge to trim and offset the c emissions from its operations to zero by 2050, the Journal has reported. Mr. Woods antecedently called specified nett zero commitments a “beauty competition.”