Big Oil to make 'substantial increase' in renewables deals, report claims

Major oil and gas firms are “anticipated” to undertake a large-scale shift into the renewables marketplace, according to a new report by Pinsent Masons.

It claims there will be a “substantial increase” in big oil firms making renewable energy sector deals in the “near future”.

But some traditional firms are not expected to make a wholesale shift away from their traditional industries.

Global law firm Pinsent Masons released an exclusive survey of the opinions of Europe’s 100 fastest-growing energy companies.

According to the report, 77% of companies surveyed believe big oil and gas firms are set for a large-scale shift into the renewable energy sector.

Pinsent Masons claim the expected shift is largely down to “increased interest from more agile tech-based business” and a “need for the traditional players to maintain market share in an ever-evolving marketplace”.

Almost 61% of firms responding also said wind power was the “most likely to offer additional opportunities for investment”, with 31% seeing solar power as the next most attractive sector.

Paul Rice, global head of energy for Pinsent Masons, said: “In Europe, wind power – particularly offshore wind – has become much cheaper to generate, making it very attractive to investors.

“In the UK, for example, the winning bids for some recent large offshore schemes are a third of the tariff price they were just a few years ago.”

Big firms such as BP, Shell and Norwegian energy giant Equinor, formerly Statoil, have all made well-publicised forays into the renewable energy sector.

Pinsent Masons claim 58% of  the responding firms identified offshore wind as the sector with the greatest scope for adding capacity.

However, the new report also warns that some traditional firms will be reluctant to shift away from where their most profitable opportunities have historically been.

Businesses responding to the survey estimate that 43% of their revenue will come from mergers and acquisitions (M&A) over the next three years, up from 38% over the past three years.

Pinsent Mason claim this implies a “substantial increase in the number of deals these businesses will aim to complete”.

Pinsent Masons’ energy analyst Thorsten Voltz said: “When you look at renewables, you have a group of investors willing to provide financing because the revenue stream is steady and reliable.

“That means insurance companies, pension funds and others are active in this area.”

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