Oil firms must think beyond shareholders

http://www.theguardian.com/business/2015/feb/12/oil-firms-must-think-beyond-shareholders

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The difference between Shell’s boss, Ben van Beurden, and his critics is that when he argues for the continued extraction of fossil fuels he has his shareholders in mind, while those in favour of renewable technologies are concerned about the future of the planet (Shell boss launches counterattack against naive critics of fossil fuels, 12 February). Calling environmentalists “naive and impractical” does not wash, given the considerable body of research that links climate change to carbon emissions caused by the burning of fossil fuels. Of course, the transition to a sustainable energy future will take time but in the process we must not be swayed by industry chiefs concerned primarily with the bottom line. Let’s hope that the negotiators at the crucial climate change talks in Paris later this year take the long-term view and put planet before profits.Fiona CarnieBath

• Ben van Beurden may be right when he says “a sudden death of fossil fuels isn’t a plausible option” . But he seems to recognise that scientists are right that fossil fuels are slowly heating up the Earth with disastrous climate changes. So surely oil companies should be preparing a 10-year plan for switching from fossil fuel exploitation to renewable energy systems and announcing that by 2025 all their oil wells will be sealed off. In that context Shell should now abandon drilling in the Arctic and investment in Canadian tar sands.Michael BasseyAuthor, Convivial Policies for the Inevitable

• The common assumption is that oil companies are awash with cash, but it is common to enter into ventures with partners to help fund projects in return for a share in the ultimate revenue. It is also common to borrow money while making assumptions on retained profit from already productive assets. As a result, oil companies need to run a tight cash flow. However, when the oil price changes dramatically, as it has over the past six months, all plans go out of the window. Few oil companies have the reserves to continue with current spending plans if the price of oil remains low for extended periods of time.

The levers they have at their disposal range from stopping production from no longer economically viable assets, to borrowing more. But how do they actually get a handle on how they are spending their money and how can they be sure of the impact of borrowing more or shutting down operations? Any oil and gas company that finds itself in this quandary will struggle to remain liquid if the oil price remains low.Tristan ColgateHead of energy and natural resources, Bluefin Solutions