State oil company Equinor is once again the target of sharp criticism in Parliament, for predicting that oil will still demand prices as high as USD 80 a barrel in 2030. That’s much higher than other oil majors predict, and critics claim it may prompt Equinor to justify risky and environmentally unfriendly projects in the Arctic.
“I am very surprised, to put it mildly, that the state’s own oil company is predicting an oil price that assumes the world won’t meet its climate goals,” Lars Haltbrekken, a Member of Parliament for the Socialist Left party, told newspaper Dagens Næringsliv (DN) this week. “Equinor is betting against the (UN’s) Paris Agreement and the absolutely necessary emissions cuts that must be made.”
Haltbrekken was reacting to how Equinor CEO Eldar Sætre told DN last last week that he still believes in high oil prices. His estimates of oil prices through the rest of this decade are much higher than those predicted by oil majors like BP, Total and Eni.
Sætre expects an oil price of USD 77 in 2025 and USD 80 in 2030. That means Equinor can avoid taking major writedowns on the value of its oil and projects, not least in the Arctic.
‘Steering the world into a climate crisis’
Sætre has admitted that Equinor’s estimates are not in line either with other oil companies or the Paris Agreement’s goal of not letting global warming rise more than 2C. That inflamed Haltbrekken, who formerly led Norway’s chapter of Friends of the Earth (Naturvernforbund).
“Equinor is steering the world into a climate crisis with its eyes wide open,” Haltbrekken fumed to DN. “They’re behaving totally irresponsibly. That’s unacceptable.”
Haltbrekken challenged Oil Minister Tina Bru of the Conservative Party over whether the government can accept how the state’s own oil company is allegedly defying national and international climate policy.
Haltbrekken isn’t alone in his criticism: Espen Barth Eide, a former defense- and foreign minister who now serves as an MP and energy policy spokesman for the Labour Party, told DN he was surprised by Equinor’s oil price estimates at a time when other oil majors are cutting their own.
‘Not very realistic’
“No one knows what will happen, but for me, USD 80 a barrel in 2030 isn’t very realistic when you account for all the major changes in energy use that are expected when climate measures begin to take effect throughout the 2020s,” Eide told DN. Most believe fossil fuels won’t be so popular and that both demand and prices for oil will fall as consumers opt for alternative energy sources.
“My concern is that expecting an unrealistically high price in the future can lead to (Equinor) making decisions that aren’t good in the long run,” Eide continued. It can also lead Equinor, Eide fears, “to not grip the opportunities that exist in renewable technology early enough. At the very least, I think those of us in Norway must acknowledge that the future for Norwegian gas isn’t the same as we thought it would be just a few years ago.”
Equinor spokesman Bård Glad Pedersen, a former politican for the Conservative Party, rejected the criticism and said Equinor based its estimate on international accounting standards and law. “We can’t set a price that we hope for because it would be most consistent with the Paris Agreement, or for example a low price in order to be careful,” Pedersen told DN. “We have put forth a strategy to cut emissions and develop Equinor as a broadly based energy company in line with the Paris Agreement.”
One of Oil Minister Tina Bru’s advisers responded to the flap by sending an email to DN in which he wrote that Equinor’s board and management are responsible for such decisions. Even though the government owns 67 percent of Equinor, and remains its largest shareholder, it generally refrains from meddling in the oil company’s affairs, however controversial.