North Sea oil and gas firms ‘more engaged’ for energy transition, top academic claims

Total CEO Patrick Pouyanne Photographer: Marlene Awaad/Bloomberg
Total CEO Patrick Pouyanne Photographer: Marlene Awaad/Bloomberg

Oil and gas firms based in the North Sea are “better engaged” with the energy transition than their US rivals, according to a top academic.

A new report from Imperial College London’s (ICL) Centre for Climate, Finance and Investment claims companies like Total, Shell, Equinor and BP are significantly more prepared than other firms like Chevron and ExxonMobil.

The study measures the degree of preparedness for each firm by examining what they have said publicly with what they are also doing in terms of strategy, governance, targets and implementation.

Produced by ICL academic and former oil and gas worker Francis Shaw, the report scores the differences in pace with which oil and gas majors are implementing change.

French energy giant Total leads the pack, followed by Shell, Norwegian firm Equinor and BP.

Mr Shaw said: “There’s no doubt my research definitely found a difference between European headquartered companies and the American companies, but I think there’s a wider issue of companies reflecting the culture in which they’re immersed.

“If you think about what makes up a large international company; it’s shareholders, it’s employees and customers who are all members of society. So they also reflect society, and society’s values are not static, they change all the time.

“Where a company is based will have an impact and that’s what I’ve seen from my research.”

But Mr Shaw added that it’s difficult to pin down exactly how firms are doing in terms of the expectations put upon them.

He said: “It’s a really tricky one, because expectations are also not static.

“My report is based on what an investors perspective is, the shareholders.

“Most of these investors in these publicly trading companies are long time investors, so that means pension funds – people looking after other people’s money for a long time into the future.

“They have to think about fiduciary responsibility and they have to get the best possible return with high returns.

“The external and internal pressures are a very difficult balancing act.”

Total, for example, has increased its oil and gas acreage in the North Sea and Gulf of Mexico, while also forming a consortium to build a major offshore wind development off the coast of France.

The firm has also been busy in it’s pivot towards the relatively cleaner gas market.

Mr Shaw claims that, unlike businesses in other markets, oil and gas companies are not as constrained when it comes to shifting into a new sector.

He said: “One of the ways they are dealing with it is acting with start-ups doing venture capital type work.

“You see it with Shell looking for new innovative ideas and trying to fund them very early, offering business skills that these companies don’t necessarily have.

“What they’re doing there, in areas of low level exposure, they’re placing bets on something that may or may not succeed – but if it does they got in early.

“It’s those companies exploiting their business acumen.”

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