Though most European oil majors sound like they want to be defined as anything but, that didn’t stop them from being the most prolific bidders in the latest Gulf of Mexico lease sale.
Some of the continent’s largest multinational players are devaluing what was once their core reason for being in favor of increased investments in wind, solar, biofuels and similar renewable energy sources. Most have committed to complying with the European Union (EU) directive to be “climate-neutral” by 2050, which is in line with the 2016 Paris Agreement.
However, the U.S. operating arms of three of Europe’s largest majors were the top bidders for the mostly deepwater blocks offered in the Nov. 18 federal lease offering, according to a post-sale ranking by the Bureau of Ocean Energy Management (BOEM). The Netherlands-based Shell led all of the 23 operators participating with just under $28 million in high bids, followed in order by Norway’s Equinor at about $22 million and the UK’s BP at more than $17 million.
Ranked seventh at a little more than $6.4 million in high bids was Spain’s Repsol, which in December 2019 became the first to commit to net zero emissions, and at the same time wrote down the pre-Covid value of its oil and gas assets by $5.7 billion. As of November, Repsol had spent more than $367 million in 2020 to develop clean energy projects, compared to $232 million for traditional oil and gas projects, according to Bloomberg. The company’s 2021-2025 strategic plan calls for no less than 30% of annual expenditures to be directed to its low-carbon business.
Repsol has no plans to furlough all its rigs anytime soon, but the ones remaining will not mobilize to frontier prospects and will be concentrated only in known and developed areas, said CEO Josu Jon Imaz. “We are going to go on exploring. I mean exploration is going to be part of the future of Repsol. But we are changing our mindset about exploration because the world is changing,” he said in a Nov. 1 earnings call.
Meanwhile, U.S. super major Chevron was the fourth highest bidder at more than $17 million and a few weeks later said it would cut yearly capital spending by 26% as Covid-related demand destruction forces companies to reassess their petroleum assets. Chevron will spend $14 billion this year and no more than $16 billion a year through 2025, with $300 million directed to projects related to the transition to a “lower-carbon energy future.”
A non-participant in the sale, ExxonMobil, likewise, put the eraser to its capital budgets with yearly spending to be slashed by $5 billion to $10 billion through 2025.