* Projects based on $95/bbl oil price seen at risk
* Oil majors have significant exposure to high-cost assets
* Industry under increasing pressure to report climate risks
By Ben Garside
LONDON, May 8 Investors could spend up to $1.1
trillion over the next decade on oil projects and assets that
never reach production if governments enforce measures to curb
climate change, a report by Carbon Tracker Initiative said.
The Carbon Tracker report, released on Thursday, could help
funds and other investors avoid putting their money in oil
assets that remain buried forever.
The $1.1 trillion, around 15 percent of the decade's total
global oil and gas spending at current rates, is earmarked for
projects to 2025 that require a market price of at least $95 a
barrel to break even.
That investment is at risk if governments enforce plans to
curb the global rise in temperatures to 2 degrees Celsius, which
scientists say is the threshold for avoiding the worst effects
of climate change.
Almost 200 nations have endorsed that goal and are due in
2015 to sign up to cut greenhouse gas emissions to help meet it.
Those measures will cut demand for fossil fuels including
oil and lower prices and revenues, according to the report.
"Gambling on a $95/bbl oil price on behalf of shareholders
is risky, given that oil prices have dropped to $40 per barrel
twice in the last decade," James Leaton, Carbon Tracker's
research director, said in a statement released on Thursday.
The International Energy Agency (IEA) said last year that
even under current policies half of proven fossil fuel reserves
would be left undeveloped to 2050 and that this percentage would
increase as governments impose tougher curbs.
The oil industry is coming under increasing pressure from
investors to reduce exposure to high-cost, risky projects and
also to report the risks to their business from climate
"The Carbon Tracker report will be useful to investors
engaging oil companies on whether they are using shareholder
capital prudently as we transition to a lower-carbon future,"
Anne Stausboll, chief executive of Calpers, the largest U.S.
public pension fund in the United States, said in a statement.
Benchmark Brent crude is trading at around $107 a
barrel and has mostly held above $100 for the past three years.
Spurred by the historically high prices, companies have
increased exploration in areas such as the Arctic and
ever-deeper coastal waters.
The private sector is the major funder of these high cost
projects, exceeding state-owned producers such as Russia's
Rosneft and Saudi Aramco.
Smaller independent producers have the highest percentage
exposure, but big firms including Exxon Mobil Corp,
Royal Dutch Shell and Total have significant
parts of their portfolios at risk, Carbon Tracker said.
Many companies say they are addressing climate policies by
focusing on energy efficiency and low-carbon technologies such
as renewable power generation and carbon capture and storage.
Exxon, the world's largest publicly traded oil company, has
said there is little risk to its reserves because they will be
needed to meet expected growth in energy demand.
The Carbon Tracker Initiative is funded by several U.S. and
European foundations, including the Rockefeller Brothers Fund
and the Joseph Rowntree Charitable Trust.
(editing by Jane Baird)