The IES analysis of revised strategies of the super-majors amid COVID-19
Energy policy think tank Institute for Energy Security (IES) saysbig oil companies are beginning to focus on renewables which yields them attractive returns on investment.
“Today big oil companies are investing heavily in renewable technologies and projects because that is where the cash is drifting,” the IES said on emerging trends in the global oil and gas industry.
Despite the growth in renewables, the IES said the so-called ‘big oil’, a term to classify the global oil giants, only spent 1 percent of its combined budget on green energy schemes in 2018.
Nevertheless, it said things have changed, saying of the six super-majors – BP, Shell, Total, Chevron, Exxon and Eni – many of them have invested billions of U.S. dollars into clean energy projects.
The IES analysis of revised strategies of the super-majors amid COVID-19 showed that the big oil companies are simply transforming themselves into energy firms, with wind and solar taking an increasingly important role in their current strategies, to hedge against hardening investor sentiment towards carbon emissions.
“They are progressively positioning themselves for the proclaimed energy transition – essentially attempting to figure out how the best presently available cash cow in the world can be substituted for the benefit of their own sustainable future,” the analysts said.
The institute said former British Petroleum Company (BP) which rebranded to Beyond Petroleum (BP) in 2001, was the first oil major to commit significant capital in excess of US$8 billion to renewable projects, such as wind and solar.
“The rebranding to Beyond Petroleum was to signify BP’s shift towards other energy sources, beyond petroleum,” it said.
The institute said in early August 2020, BP announced a mammoth strategy to transform the company into an integrated energy company (IEC) with plans to increase low-carbon investment to US$5 billion (10-fold) per year, and build out a 50 gigawatts (GW) renewable power capacity by 2030, while shrinking oil and gas output by 40 percent compared with 2019.
It said Royal Dutch Shell, another integrated oil company (IOC), with a market capitalisation of a near US$100 billion and a dividend yield of more than 5 percent (even in the face of Covid-19), is well prepared for the shift to renewables to drive significant shareholder rewards.
“The Anglo-Dutch firm’s 2016 “New Energies Strategy” covered several areas including electricity, wind and solar, electric vehicle (EV) charging, and initiatives to encourage the adoption of hydrogen fuel cell EVs. The company’s investment target for green energy projects was set between US$4 billion and US$6 billion for the period from 2016 until the end of 2020,”
