ABU DHABI, United Arab Emirates—On the eve of what may be a nail-biter election for the next U.S. president—one that has NATO drawing up contingencies and Iran and Russia accused of meddling in domestic politics—the race for the White House drew a collective shrug from the CEOs of oil and gas majors.
The captains of BP, Shell, Petronas and Eni said they see the election as important mainly in the short term at the ADIPEC Exhibition & Conference on Nov. 4. They’re watching chiefly for effects on the Inflation Reduction Act (IRA) and the potential for increased hostility in U.S.-China trade disputes.
Ultimately, however, whether former President Donald Trump or Vice President Kamala Harris takes the reins of power has a transitory quality, they suggested. International oil companies draw up projects and plans that span decades and multiple presidencies.
The impact of a Trump or Harris victory is difficult to game out, Shell CEO Wael Sawan said.
He noted that under the Trump administration, the pro-oil Republican saw the largest growth in renewables while, under Biden, “you’ve had a great surge in oil and gas.”
“I think at the end of the day, economics plays a critical role as well,” he said. “The area that we are monitoring is of course what happens with the Inflation Reduction Act, which provides a stimulus into certain parts of the energy complex.”
Shell has selectively made investments in the renewables and carbon capture and storage space, and “we’ll of course observe where that goes.”
Paybacks on investments play across at least a decade, if not longer, Sawan said.
“You have to look through [a] single administration, you typically have to look through two or three administrations,” he said. “Look at the institutions and whether the institutions, the judicial institutions, the administrative, the legislative ones are sound and that you can actually take these long-term perspectives on these investments, irrespective of what government ends up being in place at any one time.”
BP CEO Murray Auchincloss said the U.S. is an important market, making up 68% of the company’s business. That includes a portfolio of upstream investments, biogas, convenience and retail.
“We always work with whoever wins an election very comfortably,” Auchincloss said. “I suppose the big challenge the U.S. faces right now is regulatory reform ... permitting reform, etc. That’s the thing that I hope whoever wins the election can really start to tackle is to make it easier, faster to invest in the United States.”
Tensions between the U.S. and China are also being watched by the majors. Longer term, geopolitical tensions between the two countries could have impacts on energy demand and the global supply chain, as well as redraw the global energy complex, Sawan said.
As China prepares to push additional fiscal stimulus to jumpstart its economy, Malaysia’s Petronas is also keeping an eye on investment opportunities.
Tengku Muhammad Taufik, Petronas president and group CEO, said that from where he stands, his job is to provide energy for 700 million people and the U.S. and China have to be treated with equal importance.
Escalating tariffs between the two nations would likely be closely watched in a second Trump term.
“We monitor [the election] because of our location and our trade relations with China as well as the U.S.,” he said. “A policy from the U.S. which deters or dampens trade or economic activity from China will inevitably have knock-on effects, and we have to prepare for that.”
That is why Malaysia and Petronas have taken the position that, “we're open to trade with anyone… That type of position has held us in good stead.”
Along with Shell, Petronas is watching for any changes to the IRA, Taufik added, which he called an “important piece of legislation, which has been for many people a benchmark which against you set legislation or incentive schemes.”
“We can't wait for just simple policies, we will have to ride it out,” Taufik said. “Policy tends to be fickle, capital tends to be impatient, but we serve a need that pans out for very long term.”
Musabbeh Al Kaabi, ADNOC’s executive director for low carbon solutions and international grow, said he wasn’t “qualified” to discuss other countries’ internal matters but also echoed interest in energy transition advancements and incentives.
Without “a strong government incentive policy to enable new forms of energy to take [on] a bigger role in the energy mix going forward, I think it's going to be a very challenging transition,” he said. “So the bottom line is here, we rely on a lot of government policies, be it in the East or West, to enable the energy transition to be just, equitable and fair.”
Eni CEO Claudio Descalzi said the company is a large investor in U.S. renewables, biofuels and natural gas.
“So we mind about what is going to happen in the U.S., but I think that whatever is going to happen, the U.S. is really focused on growth,” he said. “So I don't think that is a big difference,” regardless of the candidate’s domestic policies.
“Clearly the competition with China is there on different kind[s] of aspects,” Descalzi said, including energy, growth and their own strength.
“There is a lot of expectation about who is going to win, but I think nothing's going to change in term[s] of the position of the U.S.,” he said.
Recommended Reading
TGS Extends Appalachian Basin 3D Seismic Survey
2024-10-23 - TGS said the survey, which is positioned up-dip from the Utica condensate and gas trend, will target 276 sq miles of “key” formations in the Appalachian Basin.
E&P Highlights: Nov. 18, 2024
2024-11-18 - Here’s a roundup of the latest E&P headlines, including new discoveries in the North Sea and governmental appointments.
Valeura Energy Updates Jasmine Development Offshore Thailand
2024-11-27 - Valeura Energy has seen aggregate oil production of 10,000 bbl/d in its offshore Gulf of Thailand development over a seven-day period.
EY: How AI Can Transform Subsurface Operations
2024-10-10 - The inherent complexity of subsurface data and the need to make swift decisions demands a tailored approach.
E&P Highlights: Oct. 21, 2024
2024-10-21 - Here’s a roundup of the latest E&P headlines, with a large contract announced offshore Gulf of Mexico and strategic partnerships aimed at optimizing oilfield production.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.