Should big oil get the benefit of the doubt in the Budget?

Opec members are reported to be so concerned about the outlook for prices that they are considering a further intensification of the programme of production cuts they launched late in 2016.

Oil price forecast slashed amid fears of global slowdown

This was intended to put a floor under prices after they plunged from $115/bbl in June 2014 to less than $30/bbl early in 2016 as growth in supplies ran well head of demand.

The North Sea oil and gas industry is steel feeling the effects of the resulting downturn, which took a heavy toll on jobs in the area.

Tax breaks granted in response to calls in Scotland for the UK Government to help the North Sea industry fight back have stoked activity.

But sympathy for oil firms seems to be in short supply these days amid global fears that the burning of hydrocarbons is a big driver of the climate change that threatens a global catastrophe.

The criticism of oil and gas firms marshalled by campaign groups has lost none of its vehemence despite high-profile moves by some giants to try to show that they are doing their bit to help tackle climate change.

BPs new chief executive, Bernard Looney, recently announced plans for sweeping changes which he said would amount to the reinvention of the firm.

With BP aiming to become a net zero company by 2050, he held out the prospect that the company would devote significant resources and expertise to supporting the development of low carbon energy sources.

New BP boss insists oil giant can be a force for good on climate change

The announcement was dismissed as ‘greenwashing’ by campaigners who are concerned that BP still plans to produce huge amounts of oil and gas.

The force of Mr Looney’s claim that the production is required to generate the profits BP needs to make to invest in clean energy system was weakened by the fact he made clear its priorities also include making huge payouts to investors.

There was concern that BP gave little detail in terms of short-term targets. Mr Looney said there will be more information on that front later in the year.

But the new management team at BP appeared to demonstrate commitment to the new approach last week.

The company announced then that it planned to leave three trade associations in the USA after concluding their climate change policies were incompatible with its own.

It said: “Due to material differences regarding policy positions on carbon pricing BP will leave American Fuel and Petrochemical Manufacturers (AFPM) and the Western States Petroleum Association (WSPA).

“Due to material differences around the federal regulation of methane, as well as asset divestments in the states in which the organisation is active, it will not renew its membership with the Western Energy Alliance (WEA).”

The decision followed a review of 30 key trade associations by BP.

Oil giant BP accused of 'greenwashing' on climate change by lawyers

The company said it has communicated with five organisations with which it is only partially aligned on climate.

Its action appeared to reflect Mr Looney’s desire to make a break with the past.

Last month Mr Looney said BP would set new expectations for its relationships with trade associations. He said the company would make the case for its views on climate change, be transparent on where views differed and be prepared to leave those where alignment couldn’t be reached.

BP was accused last year of lobbying in the US to weaken rules on methane emissions, although it said it had been concerned about the duplication of regulations by federal and local authorities.

But the company’s announcement that it was leaving the three US associations cut little ice with activists who saw it as just another case of greenwashing.

“This report appears to be tokenistic, inadequate and hypocritical - like all of BP’s climate plans that we’ve seen so far,” said Mel Evans, Climate Campaigner for Greenpeace UK.

Ms Evans noted that BP remained a member of the American Petroleum Institute (API), which lobbied against former president Barrack Obama’s plans to curb methane emissions.

North Sea regulator warns oil and gas firms social licence to operate is under serious threat 

“When BP remains part of a group whose position they claim to oppose, it’s easier to get clarity on what they really think by looking at where their money is going - more oil, more gas, more climate change,” she said.

In its report on trade associations, BP said it was partially aligned with the API and derived a great deal of benefit across a broad range of topics from its membership of the organisation.

“While API’s opposition to the direct federal regulation of methane is contrary to BP’s position, API is taking action to encourage a reduction in methane emissions through their Environmental Partnership programme,” noted BP in the report.

BP published this just a day after the Jesuits in Britain organisation said it was divesting from companies whose major income are derived from the extraction of fossil fuels in response to the “clear moral imperative of acting to safeguard our planet for future generations.”.

The Jesuits in Britain said with £400m equity investments involved it was the largest Catholic religious order in the UK so far to join the burgeoning global divestment movement.

But some may wonder if dumping the shares of publicly-listed oil and gas firms will have as much impact as the investors concerned hope. They could find it much harder to influence privately-owned firms and state-owned companies, which account for the bulk of global oil and gas activity.

Shell boss highlights potential of North Sea after climate change activists disrupt its operations in Scotland 

Paul Chitnis of Jesuit Missions reckons the COP 26 UN conference on climate change in Glasgow in November will provide an opportunity for politicians to respond with greater urgency to the problem. He said the UK Government must develop credible net-zero policies with the public and private investment necessary to achieve them.

Against that backdrop, next week’s Budget could provide an opportunity for the new Chancellor, Rishi Sunak, to reform the tax system to support the required investment in the energy system.

He is reckoned to be considering ending the freeze on fuel duty to help encourage people to switch to electric cars.

But oil and gas firms may worry that a populist government that also wants to fund big spending on other kinds of infrastructure could see them as a tempting target.