French Minister Asserts: Oil Majors Must Embrace Transformation to Thrive

France’s Energy Transition Minister, Agnès Pannier-Runacher, issued a resounding message over the weekend, asserting that oil companies face an existential challenge unless they embrace transformation.

Pannier-Runacher emphasized the pressing need to break free from fossil fuels during an interview on Radio France. She underscored that “if oil companies do not undergo a profound transformation, their prospects for survival in the coming years appear bleak.”

Notably, several major oil and gas conglomerates, including France’s TotalEnergies, have initiated a strategic shift by augmenting their investments in renewable energy endeavors in recent years. TotalEnergies, for instance, has significantly expanded its solar and wind power portfolio while maintaining its commitment to liquefied natural gas (LNG) projects and trading. These moves are driven by the seismic changes in the energy landscape, catalyzed by Russia’s disruption of gas supply to a majority of Europe last year.

Not to be outdone, other industry supermajors are also embarked on a journey of “transformation” or, as BP’s Chief Executive Bernard Looney aptly puts it, “performing while transforming.”

However, the energy crisis of the previous year prompted BP and Shell, among others, to increase investments in oil and gas and reconsider plans to curtail fossil fuel production. This pivot is attributed to the complex energy trilemma encompassing security, sustainability, and affordability.

In a noteworthy move, Shell raised its dividend by 15% in June, signaling a commitment to growing its gas business and bolstering its upstream position. Shell’s Chief Executive, Wael Sawan, emphasized the need to tread cautiously, advocating against hastening the dismantling of the existing energy system faster than the establishment of a robust clean energy ecosystem. Sawan emphasized that oil and gas will continue to play a pivotal role in the global energy landscape, with demand gradually tapering over time.

Sawan further stressed the significance of sustained investment in oil and gas to facilitate a balanced energy transition, aligning with the stance articulated by BP earlier this year. The energy industry’s ongoing evolution underscores the imperative of addressing both present and future energy requirements while navigating the intricate path of transformation.

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