BAKU, Azerbaijan, May 2
By Leman Zeynalova – Trend:
Increased investment in renewables is vital for oil companies, Trend reports citing GlobalData.
“This year has seen extraordinary volatility in the oil and gas industry. The decline in the cost of renewable energies, an oil price war and COVID-19 have all contributed to the industry’s precarity. Q1 results have reflected the difficult situation, for example BP’s net profit dropped 67 percent, ConocoPhillips reported a Q1 loss of $1.7 billion, and Royal Dutch Shell reduced dividends by 65 percent - the first cut for the company since since World War II. Sinopec recorded a $2.71 billion loss despite fuel sales rebounding,” the company said.
These numbers confirm the strain the oil and gas industry is under, said GlobalData.
“The real difficulty for the industry is gaining a degree of stability, particularly given the uncertainty around the full impact of the pandemic on things such as customer behaviour and investment priorities.”
The report says that some oil companies have touted more sustainable investments and principles in recent years. “Both Shell and BP aim to reach net-zero carbon emissions by 2050. The recently exposed instability in the oil industry makes a speedy transition to sustainable energy a necessity.”
“Sustainability will remain a key theme for enterprises across industry sectors well beyond COVID-19. GlobalData’s sustainability framework shows the areas in which companies need to focus their investment to put themselves in a position to succeed. Increased investment in renewable energies and modern technologies is now vital as oil companies insulate themselves against further price shocks. Oil companies that diversify their investments and invest in the sustainability theme will be better placed to survive the long-term effects of the current crisis.”
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