The Chief Executive Officer (CEO) of Exxon Mobil, Darren Woods, has stated that Exxon Mobil Corp’s Low Carbon business has the potential to generate hundreds of billions of dollars in revenue and outperform the company’s traditional oil and gas a decade from now.
The largest US oil producer laid out to investors the aims of its emerging energy transition strategy in a meeting with Wall Street. “Exxon is tackling what should be a multi-trillion market in 10 years or more,” Woods said.
Meanwhile, the result will see an Exxon less prone to commodity price swings through predictable, long-term contracts with customers striving to reduce their own carbon footprint.
“This business is going to look quite a bit different than the base business of Exxon Mobil. It is going to have a much more stable, or less cyclical, profile,” Vowed Dan Ammann, President of Exxon’s two-year-old Low Carbon Business Solutions unit.
Meanwhile, how quickly that vision becomes a reality will depend on regulatory and policy support for carbon pricing – something the US has not broadly accepted – and the cost to abate greenhouse gas emissions, among other changes, he said.
The company noted that it 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 US$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, meanwhile, 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.
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.
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