The oil and gas industry expects to boost investment in renewables and cleaner energy in 2021, as companies seek to transform for the long term, according to a new study by DNV GL.
A record two-thirds (66%) of senior oil and gas professionals report that their organisation is actively adapting to a less carbon-intensive energy mix in 2021, up from just 44% in 2018.
Some 57% plan to increase investment in renewables, up from 44% last year, half (48%) expect to increase investment in green or decarbonised gas.
Just a fifth (21%) say they will increase investment in oil projects in 2021, as the sector “increasingly comes to terms with the notion that the world’s demand for oil has peaked or will peak in the short to medium term”, said DNV GL.
The research is based on a survey of more than 1000 senior oil and gas professionals and in-depth interviews with industry executives.
Expectations for an increase in natural gas investment remain steady at 37%.
The majority of senior oil and gas professionals surveyed said they expect these shifts in investment will lead to a wider reshaping of the industry, with 78% expecting there will be increased consolidation in the year ahead, up from 64% one year ago.
Strategic reorientation may also involve asset and business sales, with 63% expecting more demergers, divestments and spin-offs, up from 46% last year.
DNV GL’s outlook for the oil and gas industry in 2021, suggests “priorities are shifting” as investors reassess the risks of financing oil and gas projects, and as governments and industry pour billions into green recovery strategies following the Covid-19 pandemic.
“Net-zero climate policies began to proliferate in 2020, from Europe to China, and made it onto the table in the US.
“Long term, net zero policies have the potential to drive deep decarbonization of the world’s energy system, and they are already changing the direction of the oil and gas industry,” said Remi Eriksen, group president and CEO of DNV GL.
He added: “The financial markets – through the effects of the Covid-19 pandemic – have seen what peak oil demand could look like, and are increasingly factoring in changing sentiment in society towards a decarbonised future.
“Decarbonisation has moved from something on the horizon to an immediate priority, and there are signs that our sector may invest to transform rather than cut its way out of the present crisis.”