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Big Oil Is Spending Big On Dividends And Debt, Not Clean Energy

Big Oil divested assets worth $198 billion in the five years to 2020, BloombergNEF has calculated, but has not used the proceeds to invest in green energy.

Instead, the report says, the proceeds from the divestments—four times greater than what Big Oil spent on green energy in the period—were used to pay down debt, distribute dividends, and launch new oil and gas projects.

In light of the recently released report by the Intergovernmental Panel on Climate Change, this will likely infuriate some. On the other hand, in light of surging energy demand in many parts of the world, which has led to respective surges in gas prices, it shows long-term thinking on the part of Big Oil.

Still, there was a marked and unsurprising difference between European supermajors and their U.S. peers. The European Big Oil companies spent more on low-carbon energy, led by Norway’s Equinor, whose investments in alternative energy exceeded its divestment proceeds.

French TotalEnergies invested an amount equal to a little over half of its divestment proceeds in low-carbon energy, and Spanish Repsol spent about half the divestment proceeds amount on low-carbon energy.

Related: Why Big Oil And Environmentalists Need To Support This Climate Tech

Shell fared worse in terms of green investment to total divestments, however. Shell raked in some $50 billion from divestments over the five-year period, yet only invested less than $10 billion in green energy projects. Shell took in almost $20 billion from divestments, but its low-carbon energy investments were about $5 billion.

Meanwhile, in America, where oil companies face a lot less government pressure than they do in Europe, Exxon, Chevron, and ConocoPhillips only invested an amount equal to 1 percent of their divestment proceeds in low-carbon energy projects in the five-year period.

Now, however, investor pressure is mounting on U.S. Big Oil majors. So much so that they might at some point catch up with their European peers in divestments and green energy investments.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on August 11 2021 said:
    Environmental activists and divestment campaigners should know that ‘black pays for green’.

    Therefore oil supermajors should earn money from their core business, namely oil and gas to be able to invest in renewables and energy transition.

    And to continue earning more money from their core business, they have to attract investment hence paying dividends and reduce their outstanding debts to be able to get loans from the banks when they need them.

    Both European and American supermajors absolutely agree that oil and gas will continue to be their core business as long as the global economy runs on oil and gas. They, however, differ on how to present this bitter fact to the world and the media. Whilst the European supermajors try to greenwash themselves, their American counterparts tell it to the world straight.

    US oil giant ExxonMobil CEO Darren Woods and Occidental Petroleum CEO Vicky Hollub succinctly and eloquently made their position very clear on oil and gas at the CERAWeek conference in March this year when both said that “reducing carbon emissions from fossil fuels and not the actual use of fossil fuels, offers the best way to combat climate change”.

    There you have it.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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