The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Antony Currie

MELBOURNE, June 23 (Reuters Breakingviews) - War is hell, but for some it can smell of opportunity. Take Exxon Mobil XOM.N. The U.S.-Israel military campaign against Iran has prompted the $574 billion oil major run by Darren Woods to step up internal discussions about buying an Asia Pacific-based liquefied natural gas producer, including Australia's $38 billion Woodside Energy WDS.AX, Bloomberg reported, citing sources. But any deal is likely to prove disappointing.

That's because growth requires the region to buy into the conceit that the industry has been peddling for years that natural gas is an essential transition fuel in the fight against climate change. The basic premise is that wind and solar farms will surely take decades to deploy at sufficient scale. So the next-best way to reduce greenhouse gas emissions would be to replace coal-fired power stations with ones that provide electricity by burning the methane-heavy substance, which over time belches half as much carbon into the atmosphere. With Asia relying on the Middle East for around a third of its LNG imports, many countries are seeking alternatives. Australia is a top-three exporter of the fuel, so a takeover of its top producer would seem to all but guarantee bumper business for Exxon.

The logic has some glaring holes. Manufacturers like GE Vernova GEV.N have told clients they may have to wait up to eight years for a new gas turbine, whose prices have tripled. Also, LNG's climate impact is usually measured over two decades or more, by which time the methane has turned to carbon dioxide. For the first few years, though, it's 120 times as polluting as carbon.

The biggest is the miscalculation about the surge in renewables. Asia now accounts for more than 60% of the world's solar and wind power capacity, with 79% of the region - including Japan, India, Vietnam, China and Pakistan - ahead of the U.S. on solar installation, per research outfit Ember. Analysis by the Australasian Centre for Corporate Responsibility shows that between 2019 and 2024 natural gas-importing countries globally used renewables to reduce both coal and gas in electricity generation. That trend has accelerated thanks to the energy security and supply chain anxiety sparked by the Iran war, alongside improvements in the cost and performance of battery storage.

Sure, fossil fuels won't disappear any time soon, which could give an Exxon foray into Asia some short-term gains. But solar, wind and batteries have dealt the LNG industry's energy transition pitch a death blow.

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CONTEXT NEWS

Woodside Energy on June 15 said it "is not aware of any proposal and confirms it is not in discussions regarding a potential transaction with Exxon Mobil".

The statement followed a report by Bloomberg on June 13 that Exxon had been having "early stage discussions internally", according to sources with knowledge of the matter, about transactions that would expand its presence in liquefied natural gas and Asian markets. Woodside was one of the potential targets.