The oil and gas landscape is changing. The industry has found itself at the heart of net-zero debates, with cases of shareholder pressure adding to questions over how some of the world’s largest companies plan to change their business portfolios. Although all of the major industry players have pledged to 2050 net-zero targets,
in the immediate future and strategies for how to reach them differ across the companies.
Clean energy spending only accounts for one percent of oil & gas' total
A large chunk of
oil companies’ cash spending has traditionally gone toward its core business – strengthening hydrocarbon prospects. In recent years, this share has decreased in favor of greater dividends paid out, while spending on clean tech has remained relatively unchanged at around one percent. TotalEnergies has established itself as the
company with the greatest share of capex going toward low-carbon sources, with European oil majors generally more likely than their North American and Middle Eastern competitors to consider clean energy investments.
Oil & gas executives more cautious than investors about low-carbon diversification
As cases of recent shareholder pressure have showcased, there is a growing discrepancy between
executive and investor opinion on low-carbon fuel commitments. More than 40 percent of investors would favor a complete pivot toward low-carbon resources, while executives remain in support of merely complimenting their existing oil and gas business through small-scale low-carbon additions. Furthermore, the same survey also found that
low-carbon IRR expectations by executives ranged higher than the average achieved by such projects in the last few years. These opinions suggest that diversification within the industry might remain slow, as oil and gas decision-makers wait out greater investment return promises.
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