While major developed economies are vowing to «build back greener,» the world will still run on oil, and the beneficiaries, at least in the short term, will be the oil firms in countries that haven’t pledged net-zero targets and whose major oil companies are doubling down on oil production.
Ekaterina Iliouchenko, a money manager with Frankfurt-based Union Investment Privatfonds, told:
- while Big Oil, especially in Europe, vows to boost investment in renewables and streamline oil and gas operations, the world will still need to pump oil and it’ll be the Russians and Saudi Aramco.
Some investors have increased their exposure to Russian oil stocks, including in the biggest companies Rosneft and LUKOIL, as they expect those companies to take advantage of the «greening» elsewhere and double down on oil projects.
The recent major shift in U.S. oil policies with the new Administration could also play in the hands of Russian and Saudi oil, as it would eventually limit drilling on federal lands and waters once the current backlog of permits expires.
The U.S. oil industry, via the American Petroleum Institute (API), argues that the suspension of new drilling on federal lands and waters would undermine environmental progress as it would increase U.S. dependence on foreign oil imports from countries with lower environmental standards and replace oil produced with fewer emissions in the U.S. with higher-emission crude pumped elsewhere.
API President and CEO Mike Sommers said in a statement on January 2021:
- With a stroke of a pen, the administration is shifting America’s bright energy future into reverse and setting us on a path toward greater reliance on foreign energy produced with lower environmental standards.
Author: Tsvetana Paraskova
