A Rystad Energy study of eight oil majors predicts that to adjust to the energy transition, they will divest up to $68 billion barrels of oil equivalent, with an estimated value of $111 billion and spending commitments in 2021 totalling $20 billion .
A Rystad Energy study of eight oil majors predicts that to adjust to the energy transition, they will divest up to $68 billion barrels of oil equivalent, with an estimated value of $111 billion and spending commitments in 2021 totalling $20 billion.
Rystad’s study of ExxonMobil, BP, Shell, Total, Eni, Chevron, ConocoPhillips and Equinor, predicts the companies could exit 203 country positions in 60 countries and as a result reduce their number of country positions from 293 to 90. Their reduced commitment would vary from 6 to 16 countries per company.
‘Companies will look to expand in the prioritized countries through exploration, acquisitions or asset swaps with other big players. However, to stay in a country, a company may instead seek to grow its local business more aggressively to make sure the portfolio will have a positive and more significant impact on overall performance,’ said Rystad Energy’s senior-vice president Tore Guldbrandsoy.
Rystad Energy’s study shows that all the majors are likely to keep a presence in the US, and most of them may also remain in Australia and Canada. It predicts quite a few countries being reduced to only one oil major present, including Argentina (BP), Ghana (Eni), Thailand (Chevron) and Guyana (ExxonMobil).
The companies will also buy portfolios from each other to boost their position in a key country. For example, BP, Eni and ConocoPhillips could consider acquiring the Indonesian portfolios of ExxonMobil, Total and Shell. Shell’s and Total’s portfolios could be of interest to BP if the company wants to enlarge its Indonesian LNG asset base and take on a new growth asset.
Indonesia is clearly a place to stay for gas assets, with a mixture of onshore, offshore shelf and deepwater assets across all lifecycles, says the report.
In recent months majors have put larger portfolios up for sale, such as ExxonMobil, which is planning several country exits, including from the UK, Romania and Indonesia, and Shell which was trying to exit a key LNG asset in Indonesia in 2019.
Rystad also sees several such opportunities for swapping assets. For instance, BP could swap its position in Algeria for Eni’s holdings in Australia. Shell could swap its assets in Norway for Total’s portfolio in Oman.
Rystad said it also expects majors to divest assets with high emission intensity to meet long-term targets for reducing emissions.
