The world’s biggest oil companies have defended their giant bets on natural gas at a major energy conference, saying demand will soon emerge for the huge supplies of fuel they are bringing to the market.
Robert Franklin, Exxon Mobil Corp.’s vice president in charge of gas and power, said natural gas demand was rising in China, where imports of liquefied natural gas are up 40% in the past year. He said he believed India would follow China’s lead soon, recalling talks this month among energy executives and Indian Prime Minister Narendra Modi who sought ideas for switching India to a gas-based economy.
“If I’m bullish about gas generation in China and India, then I’m bullish about natural gas,” Mr. Franklin said at Oil & Money, a major energy conference in London that draws executives, investors and government officials.
Exxon and its rivals have invested over $700 billion dollars in new natural gas projects from the U.S. to Africa to Australia from 2007 to 2016, unleashing huge new quantities of gas. Exxon and Royal Dutch Shell PLC both say they produce more gas than oil now, and the same will be true for BP PLC within a decade–much of it via liquefied natural gas, which can be shipped around the world like oil.
That new potential for natural-gas supply comes as big petrostates like Qatar and Russia also plan to produce more gas. The flood of supply has depressed LNG prices and raised uncertainty about where all the new natural gas will be consumed. Many countries don’t have the infrastructure to import the fuel or the money to make the required changes.
Developing LNG markets still lack a coherent business model, said Charif Souki, chairman of Tellurian, which develops natural-gas projects. “We lack the infrastructure,” Mr. Souki said.
The question’s urgency was underscored by an entire day of talks at Oil & Money about natural gas, the first time the organizers devoted have a day to a fuel source other than crude oil.
The fuel is widely seen as a relatively low-emissions bridge from dirtier fuels like coal to a future where renewable energy sources like wind and solar become more prominent. The U.S. remains the largest emitter of CO2 but has reduced its carbon output 21% over 10 years by shutting old coal-fired power plants and launching new natural-gas power stations.
“Governments around the world are getting on board in boosting gas supply and use,” said Ajay Shah, a vice president with Shell Energy Asia.
Fossil-fuel producers underestimate renewables growth at their peril, said Otto Waterlander, a senior partner at McKinsey and Company. The industry has consistently bet renewable energy sources would grow more slowly than they actually have, and it has underestimated how reliable those greener energy sources would be.
“Let’s be a bit more cautious on what’s coming next,” he said.
Mr. Franklin of Exxon took aim at two policies that have dented the outlook for natural-gas growth: Trump administration climate-change moves and European regulations favoring renewables.
Mr. Franklin bemoaned the U.S. move to exit from the Paris climate accord, saying that the company’s chief executive Darren Woods “implored” President Donald Trump not to walk away from the deal to curb greenhouse gas emissions. And he called European policies to promote solar and wind power growth “frankly ineffective subsidies,” saying gas-fired power stations do more to help the environment.
The White House didn’t immediately respond to a request for comment. Mr. Trump has said he is open to negotiating a better climate deal for the U.S. The Trump administration has also made moves to support the coal industry.