The executive hired to turn around the flagging fortunes of Suncor Energy Inc. said Tuesday he believes the company has been too focused in recent years on the energy transition and must get back to an oil-centred business strategy.
CEO Rich Kruger, who took the reins at the Calgary-based fossil company this spring, told analysts on a conference call that the company’s board of directors agrees with him that a “revised direction and tone” at the company is necessary, The Canadian Press reports.
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He said he believes Suncor has been neglecting “the business drivers of today” in pursuit of what he characterized as future-focused, clean, and low-carbon energy pursuits. [Erm, how lucky do you feel??—Ed.]
“We have a bit of a disproportionate emphasis on the longer-term energy transition,” Kruger said, adding that while these pursuits are important, they are not what is going to make money for shareholders today.
“Today, we win by creating value through our large integrated asset base underpinned by oil sands.”
Kruger, the former CEO of ExxonMobil’s Canadian subsidiary Imperial Oil Ltd., was lured out of retirement this year to lead a restructuring at Suncor in the wake of a spate of high-profile operational and financial challenges at the company, CP says.
On Tuesday, he said the company has already made “material progress” towards its new goal of focusing on the fundamentals. In June, Suncor announced it would lay off 20% of its work force, or 1,500 people, by the end of the year in order to eliminate unnecessary or “unaffordable” work.
As of August 1, 535 of those job reductions had already occurred, Kruger said, resulting in a cost reduction of about $125 million.
Suncor’s stated goal to refocus on its oil sands assets comes even as the company has publicly committed to achieving net-zero greenhouse gas emissions by 2050, CP notes.
Suncor is also a member of the Pathways Alliance, a consortium of Canadian oil sands companies that have all made the rhetorical net-zero commitment and have proposed working together to construct a massive carbon capture and storage transportation hub in northern Alberta to help reduce emissions from oilsands production. But they’ve refused any firm commitment to that project unless the federal government comes through with a new round of lavish taxpayer subsidies. Environment and Climate Minister Steven Guilbeault has already told them that won’t be happening.
On Tuesday, Suncor reported $1.88 billion in profits for the second quarter of 2023, down from about $4 billion in the same period last year when Russia’s war in Ukraine drove up global oil prices.
The company took a $275-million restructuring charge in the quarter related to the previously announced layoffs. Suncor also went through a high-profile cyberattack in June ,but says the breach did not affect its financial results for the quarter.
Last year, Suncor sold off its wind and solar power assets, getting out of the renewable energy business it had been involved in for more than two decades.
This report by The Canadian Press was first published Aug. 15, 2023.
