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

By Irina Slav - Aug 11, 2021, 10:30 AM CDT

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