The energy crisis provoked by Russia forced the largest Western oil and gas companies to reconsider their attitude towards "green technologies" and the energy transition. Now oil majors are postponing global green projects to a later date, and investments in expanding current oil and gas production are coming to the fore. This is reported by Bloomberg, which analyzed the strategic plans and reports of companies.
Western companies were forced to change their rhetoric from “green” to traditional by a record-breaking year for energy companies. American Exxon Mobil Corp. and Chevron Corp have already announced a return to their roots and intention to increase investments in oil and gas production. European majors such as Shell, BP and TotalEnergies follow their example, although a year ago almost all of these companies announced their large-scale restructuring in favor of carbon-neutral work.
British BP CEO Bernard Looney acknowledged that oil demand in 2023 will exceed pre-pandemic 2019 levels, although in 2020 he also assumed that the peak of oil demand has passed and will probably never return to such levels. Against this background, BP has reduced the ambition of its own emission reduction targets and increased its forecast for the production of classical hydrocarbons. Shell directly announced the reduction of investments in "green energy", while increasing investments in gas production. TotalEnergies also announced an increase in the capacity of its gas division, focusing on liquefied natural gas (LNG) as well.
The decisions of majors are significantly influenced by ordinary shareholders of companies who, in pursuit of profit, expect companies to maximize income, including through the buyback of shares from the market (buyback – companies thus increase the value of shares and allow shareholders to earn). Chevron alone promised shareholders about $75 billion in buybacks. Minority shareholders also play an active role, for example, Dan Loeb's Third Point fund acquired a significant stake in Shell back in 2021 and began to pressure the company to refocus on oil.
The oil and gas giants do not completely abandon the "green agenda", but they are changing directions. If earlier the majors looked towards low-margin sectors, such as electricity generation using wind energy, now they are interested in the creation of networks of electric filling stations, as well as the production of biofuels – sectors that are cheaper and closer to traditional energy in terms of implementation and costs.
The abandonment of large-scale "green" projects is already causing concern among research companies and environmentalists. They suspect that a paradigm shift could lead to an accelerated impact on the environment, fail to meet emission reduction targets, and ultimately lead to a significant worsening of the situation caused by global warming. But for investors, analysts say, this is a good sign, as European and American companies will be able to achieve new records in profits against the backdrop of Russia's reduced role in world markets.