March 7, 2017 Read More →

Aligning With Market Shift, Statoil to Increase Renewables to 15-20% of Total Holdings

Wall Street Journal:

Norway’s Statoil ASA aims to increase its investment in renewables to between 15% and 20% of total spending by 2030, up from 5% today.

The commitment to increasing the company’s alternatives to fossil fuel energy is driven by a view that global demand for oil will eventually peak, and the company wants to get ahead of that shift, Statoil Chief Executive Eldar Saetre said in an interview Monday at the CERAWeek conference in Houston.

Statoil, which is majority state-owned, has focused its renewable investments so far in offshore wind, an area where it can tap some of its offshore oil expertise, Mr. Saetre said.

“One day, there will be a peak in oil demand,” he said. “There is a debate about when that will happen. At some point, it will be a shrinking business.”

Varying scenarios put the date of oil’s growth peak somewhere between the mid 2020s and well into the 2030s, Mr. Saetre said. According to a forecast released Monday by the Paris-based International Energy Agency, oil demand will rise for the next five years to hit 104 million barrels a day by 2022.

While long-term concern over demand for oil and gas is motivating investment in alternatives, such businesses can also provide a hedge against the volatility of the oil and gas business, which depends heavily on the price of the commodity, according to Mr. Saetre. That kind of bulwark against cyclical ups and downs in prices is especially important to a company like Statoil, which has focused heavily on oil and gas production, leaving it with an even more concentrated exposure to price swings than many other big players that have more sizable refining and pipeline businesses.

“As an upstream company we are totally exposed to oil and gas prices and we have to live with whatever that commodity environment gives us,” he said. “To have a portfolio that also has elements that are independent and doesn’t follow oil and gas is useful in tough times.”

($) Norway’s Statoil to Increase Bet on Renewables

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