Equinor to up renewables spend but grow oil, gas output
Norway's state-controlled Equinor has outlined plans to increase investment in renewable energy but said it still expects its oil and gas production to grow in the medium term.
In today's strategy update detailing plans to accelerate its transition to a lower-carbon future, Equinor set a goal for renewables and low-carbon solutions to account for over 50pc of its annual investment by 2030, compared with just 4pc last year. The company has also brought forward a target to reach 12-16GW of installed renewables capacity by 2030 from 2035.
It expects the internal rate of return on its renewables projects to reach 4-8pc, down from a previous target of 6-10pc, but said offshore wind projects in the UK and US could be as high as 12-16pc. Equinor has also set a target to develop its carbon capture and sequestration (CCS) capacity to 15mn-30mn t/yr of CO2 storage by 2035.
Activist pressure on oil firms to accelerate their energy transition plans was highlighted last month when a Dutch court ruled that Shell must sharply reduce its CO2 emissions this decade. Environmentalists say absolute emissions reduction targets will force companies to sell some of their oil and gas assets, delay or cancel hydrocarbon projects or significantly ramp up carbon offsets. They argue that targets to bring down carbon intensity — the level of emissions produced per barrel of oil and gas — give firms room to continue growing oil and gas output by adding clean energy projects into the mix.
Equinor has adopted the latter approach. Its strategy already included becoming a net-zero business by 2050. Now it has introduced shorter-term ambitions to reduce its carbon intensity by 20pc by 2030 and by 40pc by 2035. It made no mention of an earlier, explicit guidance to deliver average oil and gas production growth of 3pc/yr until 2026, but said it still sees a rise in oil and gas output in the medium term. New projects coming on stream by 2030 will have an average breakeven oil price of below $35/bl and a payback time of less than 2.5 years, it said.
"In the longer term, Equinor expects to produce less oil and gas than today recognising reducing demand," chief executive Anders Opedal said without elaborating. "Significant growth within renewables and low-carbon solutions will increase the pace of change towards 2030 and 2035."
The firm has decided to increase its next quarterly cash dividend to $0.18/share from $0.15/share, but this is still below pre-pandemic levels of $0.27/share. It has also introduced a new share buy-back programme of around $1.2bn/yr from 2022. Last year's oil price collapse forced Equinor to scrap a $5bn buy-back programme that it launched in 2019.
Related news posts
EU needs to shake up energy markets: Draghi report
EU needs to shake up energy markets: Draghi report
Brussels, 9 September (Argus) — The EU should take measures in energy markets that are "dominated by vested interests", including antitrust investigations, a report from former European Central Bank president Mario Draghi found today. The call came as part of Draghi's report into the EU's future competitiveness, which was requested last year by European Commission president Ursula von der Leyen. It identified cost-efficient decarbonisation as a major challenge, and said the bloc must focus on accelerated innovation and growth and overcome geopolitical dependence and vulnerability. The report, which runs to more than 300 pages, says the EU should carry out antitrust investigation into electricity and gas markets, and into energy imports, to deter "anti-competitive behaviour and tacit collusion" among companies, it said. There should be a common maximum level of energy surcharges in the EU covering all energy taxes, levies and network charges, the report found. Draghi — a former Italian prime minister — put forward specific proposals for energy markets including the development of an EU-level gas strategy, progressively moving away from spot-linked sourcing and increasing EU bargaining power, and reinforcing long-term contracts. He argues for decoupling inframarginal generation from natural gas prices through long-term power purchasing agreements (PPAs) and contracts for difference (CfDs). Draghi wants compensation mechanisms for offering flexibility on markets as well as joint purchasing of energy in addition to demand aggregation. Other ideas tackle speculative behaviour via position limits and dynamic caps as well as an EU trading rule book with "an obligation to trade in the EU". A further proposal is a review of a so-called "ancillary activities" exemption, under EU financial regulation, whereby non-financials, typically energy, firms can trade energy derivatives more freely without being authorised as investment companies. Speaking alongside Draghi today, von der Leyen noted the need to shift away from fossil fuels and support industry through decarbonisation, also by bringing down energy prices. Draghi's report noted the difficulty of cutting emissions in hard-to-abate industries, as well as in the transport sector. Planning is crucial, the report noted. For industry, it recommended "a mixed strategy that combines different policy tools and approaches for different industries", importing some "necessary technology" while ensuring the bloc retains some manufacturing capacity. It called for "a joint decarbonisation and competitiveness plan where all policies are aligned behind the EU's objectives." Von der Leyen did not react to specific proposals put forward by Draghi, and she is not obligated to act on the report's proposals. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Gulf producers curtailing operations on storm threat
US Gulf producers curtailing operations on storm threat
New York, 9 September (Argus) — Oil companies started to halt offshore operations in the US Gulf of Mexico ahead of an expected hurricane strike later this week. Shell said it paused some drilling operations at the Perdido and Whale platforms — located about 190 miles south of Houston — as a precaution as tropical storm Francine threatened to develop into a hurricane as it moves north from the Bay of Campeche toward the Texas and Louisiana coasts. ExxonMobil said all staff had been transported off the Hoover platform, located about 200 miles south of Houston, and operations shut-in. And Chevron said it is evacuating non-essential workers from its Anchor, Big Foot, Jack/St. Malo and Tahiti facilities, though production from company-operated assets remains at normal levels. Those facilities are located about 280 miles south of New Orleans. "We continue to supply our customers at our onshore facilities, where we are following our storm preparedness procedures and paying close attention to the forecast and track of the storm," Chevron said. Francine, which formed off the east coast of Mexico over the weekend, is forecast to become a hurricane as it moves north toward the Texas coast and northwestern Gulf, according to the National Hurricane Center. Current forecasts have it coming ashore somewhere between the Texas/Louisiana border and New Orleans Wednesday evening. A hurricane watch is in place for parts of southern Louisiana as Francine is expected to bring heavy rainfall and the risk of flash flooding across the region. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Venezuelan vote ends in opposition leader's exile
Venezuelan vote ends in opposition leader's exile
Caracas, 9 September (Argus) — Venezuelan opposition leader Edmundo Gonzalez landed in Spain on Sunday after an arrest warrant accused him of terrorism as President Nicolas Maduro continues to crack down on dissent despite international condemnation. Gonzalez fled to Spain after several days of shuttling between foreign embassies in Caracas "to save his liberty, integrity and life," Maria Corina Machado, Gonzalez's ally and the key opposition figure blocked by Maduro from running in the election, said on social media. "My departure from Caracas was surrounded by episodes of pressure, coercion and threats in order to not allow me to leave," Gonzalez said in an audio post to his followers. "I am confident that in the near future we will continue the struggle to achieve freedom and recover democracy in Venezuela." The US and other countries have not recognized official election results from 28 July and backed the opposition coalition's claim that Gonzalez likely was the winner. But Washington has refrained from taking any action, including enforcing an even stricter regime of oil and other sanctions, to force Maduro to cede power. "The United States strongly condemns Maduro's decision to use repression and intimidation to cling to power by brute force rather than acknowledge his defeat at the polls," secretary of state Antony Blinken said. Gonzalez's departure highlighted pessimism over the possibility of a negotiated departure for Maduro, who claims that he won a third term. "Today is a sad day for democracy," EU foreign affairs representative Josep Borrell said, saying that removing Gonzalez from Venezuela was the only solution for now. Oil minister and vice-president Delcy Rodriguez confirmed Gonzalez's departure late on 7 September, labeling Gonzalez an "opposition citizen" who was granted safe passage after requesting political asylum. In the days after the election, 23 demonstrators and one national guard member were killed, according to figures from the Organization of American States. Maduro boasted of arresting 2,500 "terrorists", but human rights non-governmental organizations say the detainees are demonstrators, election workers, politicians and journalists. According to the human-rights group Foro Penal, more than 1,700 are still in jail. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil to build on G20 for climate leadership role
Brazil to build on G20 for climate leadership role
Sao Paulo, 9 September (Argus) — Brazil to build on G20 for climate leadership role Brazil is looking to use its G20 presidency to advance agreement on energy transition finance — also a central topic at the UN Cop 29 talks this year — consolidating itself as a climate leader as it prepares to host Cop 30 next year. The country has set fighting climate change as one of its G20 presidency priorities. It called for a global finance governance that includes rules for financing a "just and equitable" energy transition in developing economies and foreasier access to climate funds.Brazil is also pushing for a 2pc tax on billionaires that could generate up to $250 bn/yr in revenue. Progressing the painstakingly slow reform of multilateral development banks (MDBs) is important for Brazil. The G20 finance ministers noted in July an MDB roadmap, to be released in October, is a "key deliverable under the Brazilian presidency". MDB reforms, including aligning funding with climate goals and improving access, are also at the heart of finance discussions ahead of November's Cop 29 in Azerbaijan, and with the G20 conclusions overlapping with the climate talks, decisions made in Brazil could help shape outcomes in Baku. At G20 meetings, Brazil also proposed developing climate disaster prevention tools, reached climate pacts with the US, the UK and France, and began plans to launch a new Amazon fund. The country hopes to consolidate its climate leadership ahead of Cop 30, which it is hosting in Belem in 2025. It will capitalise on steady reductions in deforestation in the Amazon rainforest over the past two years and increased adoption of renewable energy to foster higher global climate ambitions. The government is already working on an update of its nationally determined contribution (NDC) climate plan, due early next year. Non-governmental organisations have called on Brazil to slash CO2 emissions by 92pc from 2005 levels by 2035 to 200mn t of CO2 equivalent (CO2e)/yr. NGOs also want a more ambitious 2030 target of 400mn t of CO2e/yr — the NDC currently requires emissions to fall to 1.2bn t CO2e/yr. Preliminary data from Brazil's national institute of space research indicate deforestation fell by nearly 46pc over August 2023-July 2024. Environment minister Marina Silva estimates this cut 250mn t of CO2e emissions in 2023 alone. The final overall 2023emissions data should show another sharp decline, bolstering Brazil's position as a global leader in forest conservation. The country recently launched its national policy for energy transition, establishing guidelines involving wind, solar, hydro, biomass, biodiesel, ethanol, green diesel, carbon capture and storage, sustainable aviation fuel and green hydrogen, with energy minister Alexandre Silveira saying it is "an opportunity to boost local production" on all those fronts. Brazil also launched a programme to support production of electric vehicles (EVs), although it failed to set a definitive plan to phase out internal combustion engines. EV sales reached more than 94,000 units sold in January-July — surpassing the 93,930 units sold in all of 2023. The oil producer's challenge But emissions from Brazil's energy sector rose last year, to 427.8mn t of CO2e from 424.3mn t of CO2e in 2022, with transportation remaining the largest contributor and highlighting the need for more aggressive measures to reduce fossil fuel reliance in transportation. And Brazil is steadily increasing oil production, hoping to increase it further in the south and the country's environmentally sensitive equatorial margin. Output could hit 5.3mn-5.4mn b/d by 2029-30, according to government energy research firm Epe. Brazil still wants to start laying the groundwork for Cop parties to transition away from fossil fuels at Cop 30. But Silva insists developed countries must work on eliminating fossil fuel demand first and provide financial support to help developing nations transition do so. By Lucas Parolin Brazil emissions by sector, 2022 % Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more