Oil Price Shock Hits Green Investments by Oil Majors

This article first appeared on the BNEF mobile app and the Bloomberg Terminal.

  • Oil majors cut 2020 planned capex by 25%
  • European majors reaffirm their low-carbon strategies

Low-carbon investments by oil majors have slowed amid the oil price shock, with clean energy deals closed in 1Q 2020 down 82% year-on-year.

Oil companies have faced many price cycles before, and are responding as usual by slashing capital spending, cutting costs and protecting cash flows. But this is the first significant price shock since the Paris Agreement in 2015 and now there is the added complexity of managing low-carbon investment in a down-cycle. This is a particular challenge to European majors that have been increasing their clean energy investments in recent years.

Clean energy deal-making declined in 2015, following a sharp drop in the crude price. This may be indicative of the trend this year. Up to 14 deals were announced in 1Q 2020, with only three reaching completion. This compares with 17 deals closed in 1Q 2019.

Longer-term, the low-carbon ambitions of the European majors are unlikely to be affected, but a prolonged period of low oil prices could inhibit the ability of the oil sector to invest in clean energy.

Clients can find the full report “After the Price Shock: Oil Majors’ Low-Carbon Strategies” on the Terminal or on web.  

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