Shell and Total believe future is in natural gas and not in coal

Big Oil Firms Say Future is Gas — A file photograph of the Homer Ferrington gas drilling rig, in Cyprus. Reuters

Oil companies are now saying that the future is in their other chief product: natural gas, a fuel they are now promoting as the obvious successor to coal.

With almost 200 nations set to hammer out a pact on carbon emissions this December, fossil-fuel companies led by Royal Dutch Shell and Total say they are refocusing on gas as a cleaner alternative to the cheap coal that now fuels electricity generation the world over.

Shell CEO Ben Van Beurden and Total CEO Patrick Pouyanne will join BP boss Bob Dudley, Exxon chief Rex Tillerson, Statoil head Eldar Saetre and Chevron boss John Watson at the World Gas Conference, in Paris, this week to discuss ways to promote gas as the main fuel for a sustainable world.

Coal still produces about 40% of the world's electricity and Total CEO Pouyanne, speaking to Bloomberg, said "the enemy is coal", vowing to pull out of coal mining and adding that Total could also halt coal trading in Europe.

Energy economics

However, Michael Barron, director of global energy and natural resources at the risk adviser Eurasia Group told the news agency: "They promote gas because it's already part of their business. In many ways gas makes a contribution to moving toward a lower carbon economy. But it'll all depend on the economics."

Meanwhile, Philip Garner, director general of the UK trade group CoalPro, told the news agency: "It's a question of affordability. Coal is a much more abundant resource than oil and gas, and countries that have it can't be asked to stop using it because more than a billion people still live without electricity."

Pouyanne's comments echoed remarks two weeks ago by Shell CEO Beurden, who said his firm had changed from "an oil-and-gas company to a gas-and-oil company".

In April, Shell agreed to pay $70bn to buy BG Group, mainly a gas company.

Exxon Mobil's gas output rose to about 47% of total production in 2014, from 39% six years ago. Total began producing more gas than oil last year and Shell did the same in 2013.