Sumitomo’s exit from US shale manufacturing contrasts with main power firms together with ConocoPhillips and Exxon Mobil Corp., that are making multibillion-dollar acquisitions in a wager that oil and gasoline demand will stay sturdy even because the world transitions away from fossil fuels. Japanese corporations have joined the development, with Mitsui & Co. final month shopping for a shale gasoline asset and Tokyo Gasoline Co. final yr buying Rockcliff Power for $2.7 billion.
Sumitomo — one of many opaque Japanese buying and selling firms that Warren Buffett invested in in the beginning of this decade — was the primary of the so-called “sogo shosha” to announce, in 2021, that it might now not take part in new oil growth initiatives. It goals to greater than halve carbon emissions in its enterprise by 2035 from 2019 ranges.
Whereas the corporate will push for renewable power property like offshore wind, Ueno mentioned that pure gasoline will proceed to play a task within the power transition. “Will probably be bodily and theoretically tough to give up coal and gasoline altogether, and solely use wind and photo voltaic,” he mentioned, including that international locations in Southeast Asia will want liquefied pure gasoline as their economies develop.
Sumitomo final yr purchased a stake in Woodside Power Group Ltd.’s Scarborough operation in Australia by means of a enterprise with Sojitz Corp., a fellow Japanese buying and selling home. Sumitomo will think about stakes in different gasoline initiatives by means of that enterprise, Ueno mentioned.
The Japanese buying and selling agency mentioned in its newest midterm marketing strategy that it’s going to make investments 1.8 trillion yen ($11.2 billion) over the subsequent three years in enterprise areas that it already has a aggressive edge in, equivalent to agriculture, actual property and building tools. The corporate will work on enhancements at its troubled Ambatovy nickel undertaking in Madagascar within the subsequent six months to a yr, and think about choices together with divestment after that, Ueno mentioned.
Ueno declined to touch upon conversations with buyers, together with Elliott Administration Corp., which was mentioned to have constructed a “massive” stake.
“We predict that the market has excessive expectations for us, and we’re hoping to make use of that as a gas” to enhance the corporate’s worth, he mentioned.
(By Shoko Oda, Akemi Terukina and Natsuko Katsuki)