"This business is going to look quite a bit different than the base business of Exxon Mobil," vowed Dan Ammann, president of Exxon's two-year-old Low Carbon Business Solutions unit. "It is going to have a much more stable, or less cyclical, profile." How quickly that vision becomes a reality will depend on regulatory and policy support for carbon pricing - something the U.S. has not broadly accepted - and the cost to abate greenhouse gas emissions, among other changes, he said.
Ammann declined to comment on whether expectations for rising oil prices underpin the strategy.
The company on Tuesday put out parameters for how it sees that growth unfolding, with carbon priced as much as three times current levels. Exxon is one of the most oil- and gas-focused companies among Western oil producers, a strategy that delivered record profits for its investors last year as fossil fuel prices soared. Unlike its peers, Exxon has stayed away from renewable energy like solar and wind. Its energy transition plans lean heavily on reducing carbon emissions from its own operations, which Exxon is spending $10 billion by 2027 to implement. Exxon is tackling carbon capture, hydrogen, biofuels, which it estimates have a combined potential of $6.5 trillion by 2050, equivalent to the traditional oil and gas business.
The company on Tuesday disclosed that it signed a long-term agreement with Linde Plc , adding a new client to its portfolio of companies willing to pay to decarbonize their operations.
It expects to sign contracts that should generate
multi-billion dollars in revenue annually in the next five
years, under current conditions. The business can achieve
"robust double-digit returns" off these long-term contracts,
Ammann said.
In five years or more, depending on carbon pricing and
regulatory conditions, the market could be worth tens of
billions of dollars in annual revenues, the company said in a
presentation.
(Reporting by Sabrina Valle; additional reporting by Mrinalika
Roy, Editing by Mark Porter and Marguerita Choy)
