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European oil majors to increase green investments to 16-17% of total spending

Oil&Gas Materials 20 January 2021 10:16
European oil majors to increase green investments to 16-17% of total spending

BAKU, Azerbaijan, Jan.20

By Leman Zeynalova – Trend:

Capital spending on low-carbon projects by European majors is set to grow over the medium term, Trend reports citing Fitch Solutions.

“BP is expected to see its 'green' spending increase from USD0.5bn in 2019 to USD3-4bn in 2025 and USD5bn in 2030. Similarly, a share of green investments in Eni's total capex is expected to grow from 17 percent in 2020 to 26 percent in 2023 as per a strategy update from June 2020. Planned annual green spending for the upcoming years exceeds the achieved spending on low-carbon projects over the past years for a number of companies. For example, Repsol reported low carbon investments on the level of EUR0.2bn in 2019 and EUR0.6bn in 2020. Over 2021-2025, the company plans to reach annual spending of EUR0.8bn,” the company said in its latest report.

Fitch Solutions expects that planned spending on low-carbon solutions will likely be more resilient to the oil price declines over the medium term. “The energy transition trend has gained momentum over 2020 with companies announcing higher capex on low-carbon projects and advancing their previous transition targets. In our view, any future reduction of capex will likely be assigned to the oil & gas business, potentially on the upstream side as the companies will be under investor pressure to justify delays in energy transition projects. Additionally, the tightening of emissions regulations in the US and the continuation of pro-transition policy in the EU will also likely prevent companies from decreasing their low-carbon spending plans.”

The company’s preliminary estimates indicate that the share of capex allocated on low-carbon projects for six companies (BP, Shell, Equinor, Eni, Total and Repsol) in their total capex plans is set to grow over the medium term.

“For this group of companies, the aggregated budget for green investments in 2020 is estimated at approximately 9 percent of the total aggregate budget. We estimate that the share of the aggregate budget for green investments for the companies we track will grow to 16-17 percent of the total aggregate spending plan over 2021-2023. Although we anticipate that European oil & gas majors will likely increase the share of low carbon projects, future capex plans will continue to be dominated by legacy investments, led by upstream projects. We note that the exact spending reports for 2020 and detailed spending plans for the upcoming years have not yet been available at the time of writing for a number of companies and we therefore rely on our estimates,” said Fitch Solutions.

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