As companies continue to respond to the impact of the Coronavirus, emerging report has it that Royal Dutch Shell will slash $22 billion from the value of its assets due to the COVID-19 pandemic and falling oil prices.
The multinational oil and gas company warned that significant adjustments to longer term oil price and interest rate expectations will result in impairments of $15bn-$22bn to the value of its assets in the second quarter.
Responding to the news, Professor of Global Energy at Warwick Business School, Michael Bradshaw, said individuals, businesses and governments’ response to the crisis created by COVID-19 would impact on the environment as well as the future of the oil-producing companies and countries.
Bradshaw said: “How individuals, governments, and businesses respond to the COVID-19 crisis in the months ahead will have long-term implications for the environment and the future of oil-producing companies and countries.
“After the financial crash in 2008 there was a rapid rebound in the use of fossil fuels. Within two years we returned to the same path of growing carbon emissions we would have been on if the crisis never happened.
“World leaders face a similar decision this time. They could aim for another quick and dirty recovery, increasing fossil fuel consumption to get the economy back on track, or they can double down on the promises of clean, green growth outlined in the Paris agreement and treat the recovery as an opportunity to decarbonise their economies.
“Environmental groups are already lobbying to prevent the Paris agreements becoming another casualty of the pandemic, stressing the need for a Green New Deal. If they are successful, demand for oil might never return to the peak we saw prior to COVID-19.
“For example, there is no guarantee the transport sector will fully recover. After the pandemic, we might have a different attitude to international air travel or physically going into work.
“This will create huge challenge for oil producers, especially if demand and prices fail to recover sufficiently to support a managed transition to a more sustainable future.”
Peace Obi
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