As the government embraces green energy, the political influence of large oil companies weakens

In 2007, the handshake between the then British Prime Minister Tony Blair and Muammar Gaddafi in the desert was not just a moment for the Libyan leader to cement relations with his rival. This is also a clear symbol of the role played by “Big Oil” in foreign policy.

BP reached an important exploration agreement during the same trip, which limited its efforts to promote the rebuilding of relations between the British government and the late North African dictator, while opening up access to huge hydrocarbon resources at the door of Europe.

The battle for fossil fuel resources has been affecting geopolitics for decades, from triggering conflicts and shaping relations between the West and the Middle East, to today’s controversy over the Nordstream 2 pipeline from Russia to Western Europe.

But now the relationship between Occidental Petroleum and its government is undergoing a dramatic shift, as the government promised to go green and fossil fuels fell out of favor-a move that accelerated the pace when US President Joe Biden convened an international conference in April. Climate summit Put pressure on countries to reduce emissions.

Greg Priddy, a former energy analyst in the US government, said: “There has always been a view that geopolitical power is closely related to oil acquisition.” “Even when the Obama administration took office in the United States, some people believed that overseas Manufacturers are of strategic importance. But this is all changing.”

In 2007, the then British Prime Minister Tony Blair (left) was with Libyan leader Muammer Gaddafi. This meeting symbolizes the role of the “oil giant” in foreign policy © LEON NEAL/AFP via Getty

Last month, when International Energy Agency A report released that believes that if the world is to reduce greenhouse gas emissions to net zero by 2050-a prerequisite for achieving the Paris climate agreement to limit global warming to 1.5C above the pre-industrial level-it must immediately Stop the exploration of new oil fields.

Even before the report was released, oil companies had already cut back on investment in risk frontier exploration, worrying that oil consumption might reach its peak in the next decade.

But in countries where oil executives once played almost as important a role as ambassadors in managing relations with foreign leaders, their influence is waning. Critics have complained about the “revolving door” between the government and oil groups, and officials have entered the industry after leaving public life. But analysts said the government no longer wants to be seen as supporting overseas fossil fuel companies while pushing a domestic agenda based on renewable energy.

In the United States-the world’s largest oil producer and consumer-the Biden government rejoined the Paris agreement, cancelled the Keystone XL oil pipeline and proposed Unprecedented investment In terms of clean energy.Internationally, the White House has pressured other countries to stop funding overseas coal projects last month G7 country commitment Do this by the end of this year-and lead the climate summit.

“With the change of government in Washington, I think we may have seen the dusk of the US government’s love for oil companies,” said Helima Croft, a former CIA analyst in charge of commodities research at Royal Bank of Canada Capital Markets.

“Protecting access to resources was once seen as an important issue in Washington, but now with the energy transition and climate change concerns, this is no longer the case.”

However, observers warn that attempting a global transition to renewable energy is a complicated calculation.

Large oil companies say that although they enjoy support, they never rely on the government to help them obtain resources, and they are still popular in many countries.

But industry insiders believe that politicians may lose global influence by weakening ties with domestic oil and gas companies and guiding developing countries away from fossil fuels. They say, for example, the United States should use its huge hydrocarbon resources to support potential allies that may rely on supplies from countries such as Russia.

“It is currently in geopolitical competition with China to compete for economic influence in many parts of the world,” said a former senior U.S. national security adviser, who now works for a major U.S. oil company and requested anonymity. “The United States has an advantage in the supply of LNG, but it seems to be less enthusiastic about using them.”

Workers on the Kenyan railway line built by China.Petroleum Group says Western countries have failed to use their energy assets to compete with Beijing for economic influence

Workers on the Kenyan railway line built by China. Petroleum groups say that Western countries have failed to use their energy assets to compete with Beijing for economic influence © Luis Tato/Bloomberg

Jason Boldorf, former special assistant to Barack Obama and director of Columbia University’s Center for Global Energy Policy, pointed out that global demand for oil has hardly slowed down.

“The IEA roadmap is very compelling in terms of highlighting what needs to be changed, but it also shockingly stated that nothing has changed-oil demand is still rising,” Boldorf said.

He said that the role of natural resources in foreign policy will evolve with the energy transition. The key minerals for batteries or the availability of alternative fuels such as hydrogen mean that the relationship between large raw material producers and the government will change rather than disappear.

“Even if all the problems of energy geopolitics are resolved through decarbonization, the energy transition will undoubtedly create new problems,” he said.

Ultimately, high-level political support cannot protect oil companies from the impact of the incident. Blair may have paved the way for BP, but its investment in Libya did not bear fruit, and the 2011 civil war and subsequent conflict disrupted its plans. In 2018, the company sold half of its exploration rights shares to Italy’s Eni.

“There is always an interesting relationship between the government and the large oil companies, but I have always been unsure of how this effect happened,” said Professor Paul Stevens, a distinguished researcher at Chatham Institute.

“But as the oil is about to flow out… these companies are struggling with the actions of the guards, and the government can do nothing.”

Climate capital

Where climate change meets business, markets, and politics. Explore the Financial Times report here.

Are you curious about the environmental sustainability commitment of the Financial Times? Learn more about our science-based goals here

Source link