Oil Industry majors facing up to post-oil financing - Unconventional resources and biofuels lead the way
Following the economic and financial crisis that began in late 2008, oil majors have revised their strategies and refocused their efforts on their core business : hydrocarbons exploration and production. After a brief decline in 2009, majors have since resumed with greater intensity their investments which increased by 12.4% per year on average. These are mainly directed towards upstream activities whose share in total investment in the pace of four years increased from 79 to 85% on average.
While production of liquids continues its inexorable decline started in 2005, natural gas is the axis of diversification favored by the majors. With an increase since 2003 of natural gas production by 1.0% per year, this resource has established itself as a major component in the energy mix of majors. This development in natural gas relies in particular on the development of unconventional resources* obtained primarily through acquisitions of great magnitude. These resources, abundant and geographically better distributed, allow majors to secure their supplies while providing a growth driver that the sector lacked. In addition, through the development of liquefied natural gas, majors can overcome local production-consumption constraints and thus make the most of their resources on the market.
Diversification into alternative energy that began in the early 2000s is slowing and majors are refocusing their projects to the most close to their core competences. Biofuels concentrate most of the investments made by the majors, both in terms of production capacity and in the field of research. In contrast, wind and solar are abandoned by majors seeking to finance their upstream activities, except TOTAL SA that is pursuing its ambitions in photovoltaics.
* Unconventional resources encompass :
- Liquids : Tight oils, heavy and extra-hevy oils, tar sands, oil shales, shale oil, synthetic crude oil
- Gas : Tight gases, coalbed methane, gas shale, methane hydrates
Sia Partners - C. de Lorgeril, R. Bonnette
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