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European Big Oil sales footprint to shrink as transition ramps up - JPMorgan

European Big Oil sales footprint to shrink as transition ramps up - JPMorgan
European Big Oil sales footprint to shrink as transition ramps up - JPMorgan Copyright Thomson Reuters 2022
Copyright Thomson Reuters 2022
By Reuters
Published on Updated
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By Ron Bousso

LONDON - Europe's Big Oil companies will see their share of global energy sales slowly erode over the coming years as growing output of renewables and low-carbon fuels only partly offsets a decline in oil and gas, according to a new report by JPMorgan.

Shell, BP and TotalEnergies have in recent years outlined plans to boost investments in renewable power and biofuels in an effort to slash greenhouse gas emissions amid rising pressure from investors and governments.

BP and Shell aim to gradually reduce their oil output by the end of the decade, while TotalEnergies will see a small increase in output. All three plan to grow their natural gas output.

According to research by JPMorgan, which uses Joules energy units to better reflect the companies' growing energy mix, the three firms produced in 2021 around 2.6% of global energy demand, or 43.6 Petajoules per day (PJ/day), which almost entirely came from oil and gas.

The companies - which have large retail networks and trading operations - however sold more than three times the volume they produced at 134.7 PJ/day, accounting for 8.1% of global energy demand.

By 2025, the group's total energy production is set to slip to 2.5% and total sales are set to decline to 7.9% of global energy demand. Within the mix, the share of renewables and low-carbon energy will grow to 5%, partially offsetting a decline in oil and gas production.

JPMorgan analyst Christyan Malek said that while Big Oil firms will continue providing a significant part of the world's energy, the supply will fall short of the expected growth in demand.

"Over the long term their energy supply is below global demand trends and risks exacerbating a widening global shortfall if they continue to focus on shareholder returns and decarbonisation over investment," Malek told Reuters.

Graphic: European Big Oil's energy mix https://graphics.reuters.com/EUROPE-MAJORS/mopanxnjmva/chart.png

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