Pourbaix Defends O&G Sector Contributions In Light Of Recent Government Criticism
In light of recent government comments that the oil and gas sector is hoarding cash while enjoying skyrocketing profits and shareholder returns, Cenovus Energy Inc.’s top executive came to the industy’s defence Wednesday, saying the financial contributions made by producers are often overlooked.
“At the same time we’re paying down our debt and providing returns to our shareholders, we’re also making significant contributions to government. When the oil and gas sector does well, Canada does well,” Alex Pourbaix, president and CEO, told the company’s Q3 conference call this morning.
“A recent Peters & Co. analysis shows that oil and gas companies are expected to contribute about $50 billion in royalties and taxes to the Canadian federal and provincial governments in 2022. That’s money that pays for health care, education, arts and culture and much more across this country,” he added.
“To put this in perspective, our sector’s anticipated government contributions this year are equivalent to more than two-thirds of the funding for all of Canada’s hospitals last year. And that’s under the strain of COVID. Cenovus and our peers are further bolstering the economy by investing our revenues back into our businesses, supporting jobs and providing economic benefit for suppliers and manufacturers in every province.”
In recent weeks, both Canadian and U.S. government leaders have called on the sector to divert more of the strong earnings and cash flows that have been generated in recent quarters towards climate change efforts and other initiatives.
In Canada, Environment Minister Steven Guilbeault, in a video posted on Twitter, criticized Canadian oil companies for failing to put cash behind their promises to tackle climate change.
He said the country's major oil players have promised to do something about greenhouse gas emissions but instead have funneled most of their record-breaking profits to shareholders.
"We're already putting our money where our mouth is," Guilbeault told The Canadian Press. "I'm not sure they are."
Meanwhile in the U.S. President Joe Biden recently suggested he might consider slapping a “windfall tax” on oil-company profits. He said said he would work with Congress to look at what measures they could take against companies that fail to reinvest profits to increase oil production and refining capacity.
Pourbaix again referred to the analysis in the Peters & Co. report, noting Canada’s oilsands sector is leading the charge in environmental spending.
“That same analysis shows our sector making capital investments of about $40 billion this year alone. And it’s much more when you add in our spend on annual operating costs. These investments include money for environmental and GHG reduction initiatives,” he said.
“In fact, our sector is the largest spender on environmental services in Canada. The Pathways Alliance Cenovus jointly founded with five of our oilsands peers to get to net zero emissions by 2050 recently announced that our decarbonization projects will require investments of more than $24 billion by 2030 alone.”
Pourbaix added that he thinks the “characterization that the Canadian oil and gas industry is not contributing is fundamentally inaccurate.”
“That said, I think our industry has shown that we’re very serious about decarbonization. We support the federal government’s effort to get our country to make significant emission reductions on a path to net zero by 2050. We have the same goal at Cenovus and with our Pathways Alliance peers,” he said.
- Cenovus Energy Inc.