Oil & Gas Companies Rethink Their Renewable Energy Strategies

Oil and gas companies are among the top companies in the world when it comes to revenue. Several of the largest oil and gas companies regularly rank high on global revenue lists, such as the Fortune Global 500.

In order to combat the climate crisis effect, some of them have turned to renewables to try to change their product offering while becoming vital contributors of the fight against climate crisis. In this article, we will have the opportunity to view the future plans of some of the top companies in the oil and gas sector and how some of them rethink their renewable energy strategies.

BP Abandons 2030 Target!

On October 7th, most major financial news outlets reported on British Petroleum (BP) change of strategy related to investing in renewable energy sources. A Reuters report said that BP’s new CEO, Murray Auchincloss, is in favour of scaling back the company’s energy transition strategic plan to regain investors’ confidence.

Four years ago, BP had announced its decision to cut output by 40% while rapidly growing renewables by 2030. In 2023, BP’s senior management decided to reduce the cut to 25% in an effort to convince shareholders and potential investors that it could generate the targeted revenue with the existing strategy. However, the latest update seems to be the last straw regarding the company’s 2030 pledge as the management has faced issues trying to turn around the company share price drop. observed in the last few months.

Fossil fuel will remain BP’s core business as the firm has already invested in new projects in the Middle East and the Gulf of Mexico. Commenting on the company’s strategic plan, a spokesperson for BP said that “as Murray said at the start of year... the direction is the same – but we are going to deliver as a simpler, more focused, and higher value company.” According to the Reuters report, BP’s CEO will be able to reveal more details in an investors’ day scheduled for next February.

Investment analysts told The Guardian that “Auchincloss needs to demonstrate he has a genuine plan apart from not doing what the market doesn’t like. If the reporting is correct, the company can expect to catch significant flak from regulators, politicians and environmental campaigners. However, that is probably easier to ignore than a stagnant share price.”

Shell Reduces Biofuel Projects

Shell has also watered down its energy transition strategy, reducing its wind energy, biofuel and hydrogen projects that it had announced some years ago. The arrival of the new CEO, Wael Sawan, in January brought significant changes to the British company’s plans as he tries to cut costs and position Shell in a way that would accommodate the management’s plans to boost returns to shareholders. 

In July, Shell announced the pausing of construction of one of Europe’s largest biofuel plants, pushing back the restart to 2025.  The plant is built in Rotterdam, in the Netherlands, aiming to convert waste to biodiesel by the end of the decade. Commenting on the construction pause, Shell’s representatives said: “We’re taking the tough decision now to temporarily pause on-site construction. This gives us the opportunity to take stock, complete engineering, optimise project sequencing and in doing so maintain capital discipline.”

Earlier in March, Shell announced that it would stop exploring two projects that would help the company to produce biofuels and base oils in Singapore. The projects’ purpose was to produce sustainable aviation fuel (SAF) to supply major Asian hubs such as Hong Kong International Airport and Singapore's Changi. However, as some Asian countries do not have the same rules regarding SAF use as the US and the EU, companies and customers were reluctant to absorb the costs on the back of such products.

Shell’s CEO would like to slash the company’s costs by $3bn by the end of the year. In order to accomplish this, Shell plans to reduce the number of workers in two subdivisions of its oil and gas business responsible for exploration strategy and developing its oil and gas finds.

TotalEnergies Stays On Renewable Energy Path

On the contrary, TotalEnergies has not followed its competitors into divesting from renewable energy projects. In September 2024, TotalEnergies said that it would form a joint venture with India's Adani Green Energy Ltd in a deal which would have the French oil giant contributing an equity investment of $444 million.

According to a Reuters report, the two companies “will see each side hold 50% of another portfolio of 1.15 GW of solar electricity installations, both operational and under construction.” The French oil and gas company seeks to have 45 GW of renewable energy capacity by 2030.

In October 2024, TotalEnergies announced that it would supply Saint-Gobain French facilities with renewable electricity. According to the company’s press release, the power purchase agreement “will take effect from January 2026 for a total volume of 875 GWh over a period of five years.” Commenting on the agreement, TotalEnergies officials said: “In France, TotalEnergies has a renewable portfolio of over 2 GW, preventing the emission into the atmosphere of 800,000 tons of CO2 every year. That’s a persuasive argument for our customers.”

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.