Can oil and gas companies truly transition into sustainable energy companies?

Acknowledgement: Rystad Energy

It’s going to take a lot of time and effort for big oil and gas companies to change direction and become truly sustainable. International oil companies (IOCs) are coming under increasing pressure to change, internally through shareholders’ wishes to be green and reduce carbon emissions, and externally through court action and public protest. BUT there are entire national economies that rely almost exclusively on the profits of their state oil companies and they are simply not inclined to kill the golden goose, even at the risk of destroying themselves, and the rest of the earth.  

How can oil and gas companies transition to being sustainable?

A complete refocus is needed to become sustainable and thereby carbon neutral. As a starting point, they would need to abide by the most basic principles of sustainability:

  1. To do no harm through our activities
  2. To replace what we have taken
  3. Where it is not possible to replace, then substitute something of equal value to our community and the physical environment.

Oil and gas companies simply cannot comply with the first two objectives, but the third is certainly attainable by diversifying investment into carbon capture technology, sustainable fuels & petrochemicals, commercial forestry, renewable energy and so on.  Simply put, carbon neutral value addition can be achieved  by balancing what has been taken with what can be given back.

If all this seems a bit pie in the sky, we can take a look at Neste, an oil refining and marketing company in Finland, which is already obtaining more than 70% of its profits from renewables.

What are most oil and gas companies currently doing?

US companies

In a nutshell, US Government policy has flip-flopped massively and shareholders generally seem to be chasing short term profits. I’ve looked at two US oil and gas companies to see what they are, and aren’t doing, to change.


In 2021 the investment company Engine no 1 successfully elected three new independent directors to the Company’s Board in spite of holding  a meager 0.02% of ExxonMobil stock. They asked three things:

#1: Refresh the Board of Directors with energy experience.

#2: Impose greater long-term capital allocation discipline.

#3: Implement a strategic plan for sustainable value creation in a decarbonizing world.

ExxonMobil investors backed IEA Net-Zero reporting at the annual general meeting on 25th May 2022, BUT more than 80% of ExxonMobil’s investors/ shareholders voted against a resolution filed by activist group Follow This, which urged faster action to battle climate change.

(BP, Shell, ConocoPhillips and some others have also disclosed such net zero reporting data, but Chevron shareholders rejected a similar proposal to the one that passed at ExxonMobil.)

Unlike some of its peers, ExxonMobil continues to reject emissions targets that include Scope 3, or customer emissions, which make up the bulk of pollution from fossil fuels. Their argument is that they are increasing gas production, which increases scope 3 emissions, but in an effort to reduce pollution from coal, which is a much bigger carbon emitter.

ExxonMobil is expanding their oil and gas portfolio with a whopping USD 167 billion until 2029.


At the May 2022 shareholders meeting Chief Executive Michael Wirth stated:

“We aim to lead in lower carbon intensity oil products and natural gas, and to advance new products and solutions that reduce the carbon emissions of major industries.” 

This vague statement is not really what the world wants to hear, but then, in June 2022, Chevron acquired Renewable Energy Group, a manufacturer of bio and sustainable fuels. It looks like Chevron is trying to buy its way into become partly sustainable. They plan to grow  renewable liquid fuels production capacity to 100,000 barrels per day by 2030. This is not a lot compared to the increase of production in the first quarter of 2022, by 109,000 barrels per day from the same quarter a year earlier.

Chevron plans to spend USD 94 billion in new oil and gas fields until 2029.

European companies

Various governmental policies and initiatives, as well as institutional shareholder pressure, have made a very positive start towards becoming sustainable.


Shell shareholders recently agreed with Shell directors to focus on the goals of the Paris Agreement on climate change. This includes alignment with the Taskforce of Climate related Financial Disclosure (TCFD) recommendations and an agreement to abstain from supporting anti-climate-change lobbyists.

In May 2021, a Dutch court ruled that Shell must reduce its emissions – including those from the fuel it sells – by 45% by the end of 2030. Shell has appealed the ruling, saying it cannot be held responsible for customers releasing (scope 3) emissions in the use of Shell products.

ClientEarth, an environmental law organisation, is now suing the directors of Shell for failing to properly prepare the multinational oil and gas company for Net Zero.

 In May 2022, shareholders backed Shell’s climate strategy but… Shell’s capital spending plans still remain heavily tilted towards new oil and gas fields: USD 149 billion until 2029.


Our purpose is reimagining energy for people and our planet. We want to help the world reach net zero and improve people’s lives. 

BP has one of the largest renewable energy portfolios among its peers. BP aims to slash oil output by 40%, or about 1 million barrels per day, an amount equal to the UK’s entire average daily output in 2019. At the same time, BP intends to boost its capacity to generate electricity from renewable sources to 50 gigawatts, a 20-fold increase and equivalent to the power produced by 50 nuclear power units.  

BP and Equinor are also investing in a number of industrial clusters in the UK. Emissions from the Teesside and Humber clusters will be captured, transported and stored in the East Coast Cluster, thereby providing storage of up to 27 million tonnes of CO2 per year by 2035.

BP shareholders have also backed their company’s climate strategy BUT BP is also spending USD 71 billion on new oil and gas fields.


TotalEnergies ambition is  to be a world-class player in the energy transition and to get to net zero in 2050, together with society.The company’s main strategy is to diversify its portfolio of investments across the entire energy value chain, as well as in various renewable technologies.

TotalEnergies is rapidly increasing its investment in solar and wind.  One example is its accelerated push into the US renewables sector with a deal to buy 50 percent of San Francisco-based wind, solar and storage developer Clearway Energy Group (CEG). 

In September 2020, TotalEnergies announced plans to invest more than €500 million to convert its Grandpuits refinery into a zero-crude platform. Biofuels, bioplastics and plastic waste recycling form the backbone of this project.

TotalEnergies seems to be trying to become a true energy company by investing in major sustainability initiatives such as renewable fuels, power generation and recycling, but the bottom line is that TotalEnergies has also committed to spending USD 81 billion on new oil and gas fields. 

ENI Italy

We are an integrated energy company whose dedication to the energy transition translates into tangible actions aimed at achieving the total decarbonization of products and processes by 2050.

In 2017 ENI signed an agreement with Statoil (now Equinor) to explore the integration of renewable energy solutions (mainly offshore wind) into existing oil and gas fields. With renewables playing a central role in its strategy, ENI aims to invest in, and develop, renewable energy projects where the company has technological and geographical synergies with its core business, such as solar PV, wind and biofuels.


Previously Statoil, this Norwegian company has rapidly transitioned towards being a sustainable energy company. As mentioned previously,  it has levered its offshore oil technology to create carbon capture facilities, which even includes for capture of emissions from cement plants. In the US it is working with US Steel to explore the possibility of undertaking CCS and hydrogen development in Ohio, Pennsylvania and West Virginia.  

Equinor also plans to expand its acquisition of wind acreage while continuing to leverage its position in offshore wind and  CCS development.

National companies

United Arab Emirates

Using their petro-dollars, the United Arab Emirates have made some bold moves towards sustainability. They have invested in a large nuclear power station, as well as the biggest water desalination plant in the world, and are also rapidly developing solar power.  


National Oil Company Qatar Petroleum has changed its name to QatarEnergy and is rapidly developing more gas fields. Liquefied Natural Gas (LNG) is exported while low grade gas is fed into the national gas system for use in power generation, fertilizer manufacture (the biggest in the world), as well as aluminium and cement production. Boil Off Gas (BOG) from the loading of LNG tankers is captured and fed back into the process. LNG is far less offensive than coal, and aging coal-fired stations can be quickly replaced by gas-fired power stations. 

The Al Kharsaah Solar PV Independent Power Producer (IPP) Project is the country’s first large-scale solar power plant (800 MWp) and is set to significantly reduce its environmental footprint. TotalEnergies and Marubeni have a 40% share.

It is interesting to note that QatarEnergy has partnered with TotalEnergies, ENI, ConocoPhillips and ExxonMobil in the North Field East (NFE) expansion project, the single largest project in the history of the LNG industry.

The GAP: What needs to be done?

Astonishingly, there is currently no national pressure on oil and gas companies in the US to reduce their oil and gas activities. On the contrary, with mid-term elections around the corner, the government is asking for an increase in production to reduce the price of gasoline, in an effort to curry favour with voters.  The Europeans appear to be somewhat more consistent with the implementation of the Green Deal to ensure that the EU to becomes the first climate neutral continent by 2050.

What is required is a drastic reduction in consumption of oil and gas.

Electric Vehicle (EV) sales are increasing rapidly, but to support the transition, fuel  taxation levels need to increase by between 75% and 200%. In order to achieve net zero, sales of internal combustion engine (ICE) vehicles must cease by 2035.

Gas consumption is also rising mainly due to the phasing out of coal power stations, but hopefully this is simply a bridge in the move to greater use of sustainable electric power. In addition, the complete withdrawal of coal and other fossil fuel subsidies is essential to accelerate the move.

The aviation industry has started to direct extensive research into future aviation fuels, with early indications pointing to hydrogen being most promising.

On the marine front, except for the electrification underway in the ferry segment, alternative fuels are currently still mainly fossil-based and dominated by liquefied natural gas (LNG). The preferred non-fossil based fuels will be hydrogen and ammonia.

A clear and long-term predictable regulatory framework needs to be established in support of sustainability for investors to make longstanding decisions in the direction of sustainability. An example is the UK’s establishment of net-zero industrial clusters and other initiatives.

Shareholders and pressure groups need to keep pushing by whatever means to ensure a change to sustainability.


Addiction to fossil fuels is mutually assured destruction.”

The world’s biggest fossil fuel firms are quietly planning scores of “carbon bomb” oil and gas projects that would drive the climate past internationally agreed temperature limits with catastrophic global impacts.” The Guardian

So can oil and gas companies truly transition into sustainable energy companies? It appears to be ‘all smoke and mirrors’.  There is little to no change in US International Oil Companies’ attitude to sustainability, while some European companies are being forced by government regulation, legal action and shareholder pressure to become more sustainable. It’s also  true that these companies are indulging in very serious green-washing, so it’s difficult to know what they are actually doing, and what they just say they are doing. Although there is some evidence that certain National Oil Companies are actually diversifying into sustainable energy, this is not happening to the extent and the speed that is necessary. Not even close.

Their appears to be a total disconnect between what the oil and gas companies are doing and what the International Energy Agency says needs to be done to get to net zero. The long and the short of it is, that these companies can transition, but probably won’t. Certainly not in the very short time that they need to.

“Investing in new fossil fuels infrastructure is moral and economic madness….. Fossil fuel companies and the banks that finance them have humanity by the throat.. António Guterres UN Secretary General

The pursuit of endless GDP growth is pushing the Earth system over critical thresholds of carbon emissions, biodiversity loss and other planetary boundaries. What is needed is Cathedral thinking: the practice of envisaging and embarking on sustainable projects with time horizons stretching decades and even centuries into the future.

Only a crisis — actual or perceived — produces real change Milton Friedman.

The captains of the Very Large Oil Companies (VLOCs) need to start changing direction now.

As things are going, there is no chance of getting to net zero by 2050.

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