Chevron and Exxon Mobil Acquire Oil Companies

On Monday, Chevron announced its plans to acquire oil and gas company Hess for $53 billion in stock. Just two weeks prior, Exxon Mobil also announced its acquisition of oil company Pioneer Natural Resources for $59.5 billion in stock.

Global Demand for Fossil Fuels Expected to Rise

In its annual world energy outlook report released on Tuesday, the International Energy Agency (IEA) projected that global demand for coal, oil, and natural gas will reach an all-time high by 2030. The IEA’s executive director, Fatih Birol, had previously stated that the transition to clean energy is unstoppable. However, Chevron and Exxon appear to be preparing for a different future.

Oil Companies Show Confidence in Long-Term Viability

Despite the growing momentum in clean energy, Chevron and Exxon believe that oil demand will remain high for at least the next 20 to 25 years. Larry J. Goldstein, a former president of the Petroleum Industry Research Foundation, stated that these companies are committed to the industry, production, reserves, and spending.

Factors Driving Continued Demand for Oil and Gas

According to experts, the continued demand for oil and gas is due to population growth, particularly in Africa, Asia, and Latin America. Additionally, oil and gas are still relatively cheap and easy to transport compared to clean energy alternatives. Other sectors of the transportation industry, such as petrochemicals, aviation, and heavy-duty trucking, also heavily rely on fossil fuels.

Geopolitical Factors and Acquisitions

Exxon and Chevron’s expansion and acquisitions are influenced by geopolitical pressures and the possibility of European oil majors divesting their global reserves due to emissions regulations. Furthermore, these companies anticipate that the U.S. will not impose stringent climate policies on domestic oil and gas production. Sanctions on state-controlled oil and gas companies in countries like Russia, Venezuela, and Iran also provide Exxon and Chevron with opportunities to fill potential market shortfalls.

Focus on Known Oil Reserves

As governments limit exploration for new oil and gas reserves, known reserves become more valuable. Pioneer and Hess possess attractive, well-established reserves, making them ideal candidates for acquisition. Chevron’s purchase of Hess also grants access to the low-cost production region in Guyana.

Overall, Chevron and Exxon Mobil’s acquisitions and strategies demonstrate their confidence in the long-term viability of the oil and gas industry despite the global push for clean energy.