Oil majors scramble for seats on cleaner energy train

Oil majors are seeking to reduce their net carbon footprint by investing in gas fields and buying up electric vehicle manufacturing plants in response to demands for cleaner energy.

The 2018 full year results of the five big oil companies show increased commitment towards energy transition – from dirty fossil fuel to natural gas and renewables.

Shell invested $800 million in solar and wind projects as part of its new energy business during the year. The British-Dutch oil and gas company headquartered in the Netherlands and incorporated in the United Kingdom has also acquired 310, 000 acres off the Coast of Massachusetts and New Jersey with potential to generate 4.1 Gigawatts of electricity.

“Our strategy is to deliver world class investment case, to thrive through the energy transition and to maintain a very strong societal licence to operate,” Ben van Beurden, CEO of Royal Dutch Shell said on January 31, during a webcast presentation of the 2018 fourth quarter and full year results.

BP Plc, a British multinational oil and gas company headquartered in London is investing in a solar development company called Lightsource BP in which it owns 43 percent equity stake. Lightsource BP has doubled its global footprint over the past year, with presence in 10 countries now. It recently announced it would enter Brazil.

During the fourth quarter, Lightsource BP was awarded power purchase agreements (PPAs) in Australia and in the United States of America. In the United Kingdom, it announced an agreement to power AB InBev’s manufacturing plants through an innovative 100MW PPA.

Furthermore, BP has made a series of investments in electric vehicle technology and infrastructure during the year that significantly progress its advanced mobility agenda. This included the purchase of Chargemaster, operator of the UK’s largest vehicle charging network, as well as venturing investment into battery company StoreDot.

Total Plc’ adjusted net operation for gas, renewables and power segment was $756 million in 2018 notably thanks to the good performance of liquefied natural gas (LNG) and gas/power trading activities. The acquisitions of Direct Energie and the LNG business of Engie account for the increase in investments to $3.5 billion in 2018.

Exxon Mobil set its investment sail for Australia and has made Final Investment Decision (FID) to develop the West Barracouta gas field in Bass Strait to bring new gas supplies to the Australian domestic market.

The Texas headquartered oil major also has investment interests in Africa but in Mozambique’s Area 4. Co-venture participants, including ExxonMobil, secured Liquefied Natural Gas (LNG) off take commitments from the partners’ affiliated buyer entities, a key milestone enabling a rapid move toward a final investment decision in 2019 on the first phase of the Rovuma LNG project.

Improved performance has helped drive this ambition. By any measure, 2018 was a good year for the oil majors as they beat earnings estimates, reporting the best financial results since 2014.

ExxonMobil reported $20.8 billion in earnings, up modestly from $19.7 billion in 2017. BP earned $12.7 billion, more than double the $6.2 billion from a year earlier. Chevron earned $14.8 billion, up from $9.2 billion in 2017.

Royal Dutch Shell earned $21.4 billion, up from $15.7 billion in the prior year. Total SA earned $13.6 billion, a 28 percent increase from the $10.6 billion earned in 2017.