ExxonMobil earmarks $17 bln to step up lower-emission efforts over next five years

U.S. energy giant ExxonMobil has hammered out its five-year corporate plan, ramping up its spending to $17 billion on greenhouse gas emission-reduction projects over the next five years while maintaining disciplined capital investments in its portfolio. The oil major is also hoping to double its earnings and cash flow potential in this period.

ExxonMobil revealed on Thursday that its corporate plan for the next five years would prioritise high-return, low-cost-of-supply assets in the Upstream and Product Solutions businesses and support efforts to reduce greenhouse gas emissions intensity from operated assets along with those emitted from other companies.

The U.S. giant outlines that this plan is expected to double earnings and cash flow potential by 2027 versus 2019. It also supports the firm’s strategic priorities, including safety, shareholder returns, earnings and cash flow growth; cost and capital efficiency; and reductions in greenhouse gas emissions intensity. 

Darren Woods, chairman and chief executive officer, commented: “Our five-year plan is expected to drive leading business outcomes and is a continuation of the path that has delivered industry-leading results in 2022.

“We view our success as an ‘and’ equation, one in which we can produce the energy and products society needs – and – be a leader in reducing greenhouse gas emissions from our own operations and also those from other companies. The corporate plan we’re laying out today reflects that view, and the results we’ve seen to date demonstrate that we’re on the right course.” 

ExxonMobil highlights that investments in 2023 are expected to be in the range of $23 billion to $25 billion to help increase supply to meet global demand. The U.S. player remains on track to deliver a total of approximately $9 billion in structural cost reductions by year-end 2023 versus 2019.

The company’s Upstream earnings potential is expected to double by 2027 versus 2019, resulting from investments in high-return, low-cost-of-supply projects. ExxonMobil intends to deploy more than 70 per cent of capital investments in strategic developments in the U.S. Permian Basin, Guyana, Brazil, and LNG projects around the world.

Furthermore, the firm’s Upstream production is expected to grow by 500,000 oil-equivalent barrels per day to 4.2 million oil-equivalent barrels per day by 2027 with more than 50 per cent of the total coming from its key growth areas.

While approximately 90 per cent of Upstream investments that bring on new oil and flowing gas production are expected to have returns greater than 10 per cent at prices less than or equal to $35 per barrel, Upstream operated greenhouse gas emissions intensity is also anticipated to be reduced by 40-50 per cent through 2030, compared to 2016 levels.

The oil major’s near-term Upstream investments are projected to keep production at approximately 3.7 million barrels of oil equivalent per day in 2023 assuming a $60 per barrel Brent price, offsetting the impact of strategic portfolio divestments and the expropriation of Sakhalin-1 in Russia.

Moreover, ExxonMobil Product Solutions expects to nearly triple earnings by 2027 versus 2019 with growth plans focused on high-return projects that are anticipated to double volumes of performance chemicals, lower-emission fuels, and high-value lubricants.

The U.S. giant continues to leverage its manufacturing scale, integration, and technology position to upgrade its portfolio and reduce costs. Additionally, the increased cash flow and earnings will enable further net debt reduction and increased shareholder distributions. 

ExxonMobil announced an expansion of its $30 billion share-repurchase programme – which is now up to $50 billion through 2024 – and recently increased its annual dividend payment for the 40th consecutive year. The U.S. player expects to distribute approximately $30 billion to shareholders by the end of the year, including $15 billion in dividends and $15 billion in share repurchases.

Since ExxonMobil has allocated approximately $17 billion on its own emission reductions and accretive third-party lower-emission initiatives through 2027, this is an increase of nearly 15 per cent. With a primary emphasis on large-scale carbon capture and storage, biofuels, and hydrogen, nearly 40 per cent of these investments are directed toward building the U.S. giant’s Low Carbon Solutions business with customers to reduce their greenhouse gas emissions.

“We’re aggressively working to reduce greenhouse gas emissions from our operations, and our 2030 emission-reduction plans are on track to achieve a 40-50 per cent reduction in upstream greenhouse gas intensity, compared to 2016 levels,” added Woods.

Closely aligning with the firm’s existing competitive advantages and core capabilities, the lower-emissions technologies are recognised as necessary solutions to help address climate change. The company underscores that the balance of the capital will be deployed in support of its 2030 emission-reduction plans and its 2050 Scope 1 and 2 net-zero ambition. ExxonMobil also points out that it is on track with its goal to reach net-zero Scope 1 and 2 emissions in the Permian from its operated unconventional assets by 2030.

“We will continue to advocate for clear and consistent government policies that accelerate progress to a lower-emissions future. At the same time, we’ll continue to work to provide solutions that can help customers in other industries reduce their greenhouse gas emissions, especially in higher-emitting sectors of the economy like manufacturing, transportation and power generation,” underlined Woods.

Regarding ExxonMobil’s latest activities, it is worth noting that the U.S. giant disclosed last month its plans to order another FPSO vessel for a project in Guyana from SBM Offshore.

This came after ExxonMobil added two more discoveries in late October to its Guyana portfolio following results from the Sailfin-1 and Yarrow-1 wells.