Casting one’s mind back to the days before COVID-19 and the recent collapse of the oil price (at the time of writing the price of Brent crude is 60% of its price at the start of the year), the most pressing challenge facing upstream oil and gas companies was the growing emphasis by investors on ESG (environmental, social and governance) and, associated with that, the ‘energy transition’ (a term with no precise definition but which broadly is taken to mean the shift in the energy industry away from fossil fuels to renewable sources of energy, to respond to the challenge of climate change).
With the immediate COVID-19 crisis and the collapse in oil price, ESG and the energy transition are, albeit temporarily, no longer the top talking points of those in the oil and gas sector. However, when people return from isolation, economies start to repair and increased demand and production cuts result in an oil price recovery, the primacy of ESG and the energy transition as the biggest challenge for the industry will undoubtedly return.
Article originally appeared in Petroleum Review, May 2020, published by the Energy Institute (www.energyinst.org).
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