‘It will be a transition. There seems to be . . . wishful thinking that we’re going to flip the switch, and we’ll go from where we’re at today to where we will be tomorrow’
The global oil and gas sector is on board for the energy transition, but its leaders are also warning of “wishful thinking” about how easy it will be to make the shift.
On the opening day of the World Petroleum Congress in Calgary, leaders with some of the world’s largest oil and gas producers cautioned about the risk of underestimating how challenging it will be to transform existing global energy systems, as governments and the public demand tougher climate action.
The daunting challenges of how to meet rising energy demand while also decarbonizing oil and gas production dominated much of the debate during the conference’s opening sessions.
“It is difficult to replace today’s energy system, in part because of the utility of today’s energy system. Oil and gas is widely available, easily transportable,” Exxon Mobil CEO Darren Woods told the crowd on Monday.
“It will be a transition. There seems to be . . . wishful thinking that we’re going to flip the switch, and we’ll go from where we’re at today to where we will be tomorrow.”
The congress, which is expected to attract more than 4,000 delegates from around the world, is called the Olympics of the oil and gas industry and attracts some of the most influential leaders in the sector to discuss the key energy issues of the day.
The world is consuming a record 102 million barrels of oil per day (bpd) this year and demand is projected to expand by another one million barrels per day next year, according to the IEA.
Members of the OPEC+ group — including Saudi Arabia and Russia — have extended their own production cuts until the end of the year. On Monday, prices for West Texas Intermediate (WTI) crude hovered near US$91 a barrel.
Concerns about the effects of climate change are also at the fore of the debate, along with stricter government policy designed to reduce emissions.
More than 80 countries have adopted a net-zero target by 2050, including Canada, which is the fourth-largest oil producer in the world, behind the U.S., Saudi Arabia and Russia.
The chief executive of the world’s largest energy company, Amin Nasser of Saudi Aramco, told the audience the energy transition is like an epic voyage across an ocean — not a quick or easy path to reach global climate objectives.
Many shortcomings around the energy transition have led to unrealistic scenarios and timelines, said Nasser.
As well, issues such as keeping energy affordable and secure, and addressing energy poverty across the world, can’t be overlooked.
The transition is a “complete transformation of a $100-trillion global economy today,” he noted.
But the industry is under fierce pressure to take more action on climate concerns.
In Canada, the federal government has introduced a price on carbon and a new clean fuel standard. It is also set to release draft regulations later this year that will place a cap on emissions coming from the country’s oil and gas industry, putting it at loggerheads with the Alberta government.
“No one is saying we’re going to flip a switch and change the system tomorrow,” said Greenpeace Canada’s Keith Stewart. “The only thing that’s more expensive than getting off of fossil fuels is staying on fossil fuels.”
The CEOs also discussed their investments in developing technology, such as carbon capture and storage (CCS) and new low-carbon fuels.
Last week, the International Energy Agency’s executive director said that its new global outlook projects demand for oil, gas and coal will peak later this decade.
During a panel discussion, Nasser noted that when he started at Aramco in 1982, the talk in the industry was about reaching peak oil supply. However, that ignored the fact that improving economics would provide incentives for companies to find new ways to discover and produce oil.
“Now, everybody is talking about peak demand. And the same people talking about peak demand, by the way, are forecasting in the second half of this year, a 103 to 104 million barrels a day (market) — and this is in the middle of an economic downturn,” he added.
“Demand will continue to grow because, also, we are making a lot of progress in terms of reducing emissions (from) conventional energy, and as you reduce these emissions the demand for this product will increase as you decarbonize.”
Speaking to reporters on Monday, Alberta Premier Danielle Smith expressed similar skepticism with projections that oil consumption will soon hit a plateau, calling the IEA increasingly “a political activist organization.”
“I liked what . . . the Saudi energy minister had to say this morning — you’ve got to live in the real world, not on computer models,” she said.
“We’ve got to respond to the world as it is.”
Chris Varcoe is a Calgary Herald columnist.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
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Yuri Kageyama is on X:
The Canadian Press. All rights reserved.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
Companies in this story: (TSX:SHOP)
The Canadian Press. All rights reserved.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
Companies in this story: (TSX:REI.UN)
The Canadian Press. All rights reserved.
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