OPINION: Plunging oil prices will hit profits in the short term, but dealing with carbon emissions remains the oil and gas industry’s existential threat.

Some commentators see the collapse in current crude values as the beginning of the end for the industry.

This of course is not true. The fall is due to fears of immediate oversupply from Opec amid falling demand due to the novel coronavirus (Covid-19).

These market conditions could improve later this year, but underlying problems about how to tackle CO2 emissions will remain.

European companies — led by BP, Eni and Repsol — have set out their strategies by pledging to transition from oil to gas and renewables.

Their US counterparts — led by Chevron and ExxonMobil — made clear last week that they do not intend to follow.

No one was more emphatic about this than Chevron chief executive Mike Wirth, who effectively accused his European rivals of grandstanding.

He described promises to introduce concrete net zero targets as “long-term aspirational goals", adding: “Whether or not there’s a pathway to some of these remains a question.”

Chevron said that it would concentrate on short-term targets, such as reducing the greenhouse gas intensity of its oil and gas output while also reducing methane emissions and flaring.

It has no intention of following the likes of Shell into the downstream power sector, although it is a leader in carbon capture with its newly opened Gorgon venture in Australia.

ExxonMobil said that it is committed to working with academic institutions on cleaner solutions, such as biofuels and carbon capture.

But the US supermajor remains focused on oil and gas, including a plan to increase its own output from the Permian basin in the US to 1 million barrels of oil equivalent per day by 2024.

ExxonMobil chief executive Darren Woods questioned the hydrocarbon divestment strategy of some European companies.

“This idea of moving things in and out of the portfolio isn’t getting us any closer to a solution (for climate change)," he said last week.

There are two quite different approaches here. It will be interesting to see which goes down best with investors and capital markets.

Mounting public and political pressure on the financial community about global warming is changing attitudes about oil and gas.

Some of the world’s largest lending and investment institutions — such as JP Morgan Chase, BlackRock and the Norwegian sovereign wealth fund — are cutting back on carbon investments.

The net zero plans – including Scope 3 emissions from end users — declared by BP and others will influence debate in the US.

ExxonMobil and others will likely be put on the spot when they face shareholders at forthcoming annual general meetings. Equally, the US firms risk damaging the image of the whole industry in the eyes of European companies.

Meanwhile, coronavirus and Riyadh's decision to turn on the oil-production taps and crater the oil price are going to test all energy-company balance sheets.

Stock prices of oil companies were already trading at low levels before the value of crude dived by a quarter early this week.

This is a very tough — and unpredictable — time for the oil and gas sector.

The approach to green issues laid out by Chevron and the US groups could make a bad situation worse.

(This is an Upstream opinion article.)