Big Oil Patchy Deals Record Casts Shadow Over Green Makeover

EghtesadOnline: As major oil companies prepare to spend billions on renewable energy assets to stay relevant in a low-carbon future, the industry’s patchy track record on takeovers is red flag for some investors.

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02 September 2020

Ten years ago, the world’s top energy companies were spending billions of dollars on major oil and gas assets and costly drilling programs in remote parts of the world in a relentless drive to produce more, Reuters reported.

Fast forward through an oil price crash in 2014 followed by the fallout from the coronavirus pandemic this year and some big oil companies are counting the cost of the spending spree - as are their shareholders.

When Shell bought BG Group for $54 billion in 2016 in the midst of the price crash, Chief Executive Ben van Beurden made a compelling case to investors: The deal would support Shell’s dividend under almost any imaginable oil price scenario.

Four years later, with the world gripped by an unexpected global pandemic, the Anglo-Dutch company has slashed its dividend for the first time since the Second World War and suspended what was the world’s biggest share buyback program.

Now, with European policymakers cracking down on greenhouse gas emissions, the region’s major oil companies have promised to reinvent themselves as low-carbon power suppliers that would thrive in a world of clean energy.