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By Gavin Maguire, Global energy transition columnist

Greetings Power Up readers,

The ongoing COP28 climate meetings continue to hog much of the energy sector limelight, with the UN climate chief calling for the “end of the fossil fuel era as we know it” on Wednesday. Click here for the latest coverage of COP28 from the Reuters team, and sign up here for our Sustainable Switch newsletter. 

In oil markets, Russia and Saudi Arabia called on all OPEC+ powers to join oil cuts following a hastily arranged meeting between President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman in Riyadh on Wednesday. More on what they said below. 

And in natural gas, two of Australia’s largest gas producers may be pairing up to create a $52 billion giant.

Today’s top headlines:

• Russia and Saudi Arabia urge all OPEC+ powers to join oil cuts
• Germany’s budget crisis leaves struggling solar industry in limbo
• Nuclear sector must overcome stagnation to meet COP28 tripling goal
• China crude oil imports post first year-on-year decline since April

EVs charging in Belgium spell potential doom for oil. REUTERS/Yves Herman

There is plenty of hand-wringing on display at the COP28 climate conference in Dubai about the slow pace of reducing the consumption of fossil fuels to fight climate change. But as Laura Sanicola reports, one positive that delegates can point to is the growing fleet of electric vehicles worldwide that is already making a surprisingly big dent in oil demand.

Growing sales of electric vehicles in recent years have led forecasters to speed their projections for when global oil use will peak, as public subsidies and improved technology help consumers overcome the sometimes eye-popping sticker prices for battery-powered cars, according to industry experts.

“The game-changer has been the policy support for the shift to electrification quite substantially reducing oil demand from transportation sector, which has been the key driver of global oil demand growth,” said Apostolos Petropoulos, an energy modeler at the IEA.

Saudi Crown Prince Mohammed bin Salman greets Russian President Vladimir Putin catch up in Riyadh, Saudi Arabia. Sputnik/Aleksey Nikolskyi/Kremlin via REUTERS

Saudi Arabia and Russia, the world’s two biggest oil exporters, on Thursday called for all OPEC+ members to join an agreement on output cuts for the good of the global economy just days after a fractious meeting of the producers’ club.

Hours after Russian President Vladimir Putin went to Riyadh in a hastily arranged visit to meet Saudi Crown Prince Mohammed bin Salman, the Kremlin released a joint Russian-Saudi statement about the conclusion of their discussions.

The Organization of the Petroleum Exporting Countries, Russia and other allies agreed last week to new voluntary cuts of about 2.2 million barrels per day (bpd), led by Saudi Arabia and Russia rolling over their voluntary cuts of 1.3 million barrel per day (bpd).

“In the field of energy, the two sides commended the close cooperation between them and the successful efforts of the OPEC+ countries in enhancing the stability of global oil markets,” the statement released by the Kremlin said.

Separately, Russia has pledged to disclose more data about the volume of its fuel refining and exports after OPEC+ asked Moscow for more transparency on classified fuel shipments from the many export points across the vast country, sources at OPEC+ and ship-tracking firms told Reuters.

Darren Woods, Chairman & CEO of Exxon Mobil Corporation, has his work cut out. REUTERS/Brendan McDermid

Exxon Mobil (XOM.N) CEO Darren Woods’ first five years at the oil company were marred by missed oil production targets, an investor rebellion and the company’s biggest-ever financial loss.

Now, his biggest challenge lies ahead as he executes a strategy to compete for investors demanding high returns and lower greenhouse gas emissions, Sabrina Valle reports.

His plan aims to balance profits from cheaper barrels of oil closer to home, like Guyana’s vast offshore oilfields, with a risky multi-billion-dollar promise to create and sell decarbonizing services at margins akin to oil.

“We can address the emissions without throwing out all the investments that have been made (in oil),” the CEO told Reuters at the climate summit COP28 on Saturday. “Whatever the demand is, we’re competitive. That’s the strategy.”

Woods has set for himself a short four years to deliver on his latest strategy, according to Reuters interviews with Exxon executives, former employees, investors and partners.

Chevron Corp’s refinery in Richmond, California. REUTERS/Robert Galbraith

Oil major Chevron Corp said on Wednesday that it expects to spend between $18.5 billion and $19.5 billion next year on new oil and gas projects, an 11% increase compared to this year.

Its 2024 budget and that of Exxon Mobil reflect the industry’s continuing rebound after pandemic-influenced pullbacks last decade, recent acquisitions and carbon reduction initiatives. Exxon outlined its plan to spend between $22 billion and $27 billion annually through 2027.

While both are spending more, the combined sums are less than half the combined $84 billion Exxon and Chevron spent in 2013, when oil prices often traded above $100 per barrel. The two are benefiting from higher energy prices and pandemic cost-cuts.

Chevron’s figure excludes any impact from its proposed acquisition of rival Hess Corp (HES.N). That deal, which is expected to close next year, will push capital expenditures to between $19 billion and $22 billion, it said.

“There are many options that are on the table right now which speak to the phasing out of fossil fuels. It is for parties to unpick that, but come up with a very clear statement that signals the terminal decline of the fossil fuel era as we know it.”

U.N. climate chief Simon Stiell at COP28 in Dubai

Australia’s Woodside Energy and Santos said on Thursday they were in preliminary talks to create an A$80 billion ($52 billion) global oil and gas giant, as consolidation among international energy firms intensifies.

Combining two of Australia’s largest oil and gas producers would be the largest corporate deal in the country for several years, during which buyout activity has been subdued by rising interest rates and financial market volatility.

A deal, if it goes ahead, would create the biggest liquefied natural gas (LNG) producer in Australia, the world’s No. 2 exporter of the super-chilled fuel that is expected to see decades of growth to meet Asia’s energy transition needs.

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