The promises of multi-billion green strategies by big oil majors have yet to translate into widespread investment into renewable energy projects, figures by research firm Rystad Energy points out.
Norway’s state oil company Equinor stands out as the only oil major committing a majority of its future greenfield capital investment to renewable projects, argues Rystad Energy in a report published in June.
The company has pledged to invest $6.5bn into solar and wind projects of the likes of Dogger Bank, the UK's largest offshore wind development to date, in the next three years.
If Equinor is removed from the picture, renewable investments from major oil and gas companies shows a decline over the next three years, finds Rystad Energy, which takes into account solar and wind investments that were announced prior to June 1 and that can be pinpointed to specific projects, thus leaving out spending plans that may have hit the headlines, but are not project-specific yet.
“Recent suggestions of ‘resilient green strategies’ or ‘business as usual’ simply do not carry much weight, with the exception of Equinor. Not until later in the decade do we see an increase in renewable spending from other companies,” writes Rystad Energy’s product manager for renewables, Gero Farruggio.
In the longer term, Rystad Energy expects big oil majors to invest about $18bn in specific renewable energy projects by 20205. Although that represents a major leap from the investment levels of the previous decade, it remains just a fraction of the $166bn that oil majors are expected to pump into greenfield oil and gas projects in the next five years.
However, Covid-19 has dramatically changed the oil market outlook, and possibly accelerated the paradigm shift towards renewables.
“The pandemic is creating a number of distressed sellers and reducing acquisition costs for assets and companies, thereby creating opportunities for big oil to accelerate its energy transition through acquisitions. And with exploration and production companies announcing deep spending cuts, we may yet see a ramp up in renewable investments as recent headlines suggest, facilitated by new mergers and acquisitions,” concludes Mr Farruggio.