Equinor Cuts Renewable-Energy Ambitions to Focus on Shareholder Value

 

Norwegian oil major Equinor has announced a major cutback to its renewable-energy ambitions, and says that it plans to focus on maximizing shareholder value going forward. 

"Equinor has high-graded the project portfolios in renewables and low-carbon solutions, and reduced cost and early-phase spend," the company said in its quarterly report. "The portfolio is expected to deliver more than 10 percent life-cycle equity returns."

The company said that circumstances have changed since it last set its renewables targets - especially in the United States, where the political and economic winds have shifted against offshore wind development. Equinor said that these pressures have had an effect on its credit evaluation, leading it to reduce its investment target for renewables for 2030 by about 25 percent. 

"The reduced investment program is in line with our commitment to ensure a capital structure that can support a solid investment grade credit rating," Equinor said. 

On the oil and gas side, Equinor expects production to increase by 10 percent  to 2.2 MMboed by 2030, thanks to strong performance at its core Norwegian continental shelf operations. Equinor plans satellite field development and increased recovery from existing assets to help support long-term production at low cost.  

Equinor posted operating income of $8 billion and a net profit of $2 billion in the fourth quarter. It continues to invest in share buybacks, including a $5 billion buyback program for 2025 alone. "Equinor is well positioned for further growth and competitive shareholder returns. We expect to deliver industry-leading return on average capital employed, above 15% all the way to 2030," said CEO Anders Opedal. 

Equinor has been in retreat from renewables investments for some time. Last August it closed its offshore wind operations in Vietnam, Portugal and Spain, citing inflation and supply chain delays. In September, it dropped out of a proposed blue hydrogen pipeline project that would have supplied power plants in Germany, citing lack of demand for the natural gas-based product. 

It has, however, invested in growing its position in offshore-wind leader Orsted. Last year, it announced that it has acquired a cumulative $2.5 billion stake in the Danish company, just shy of 10 percent. 

“Equinor has a long-term perspective and will be a supportive owner in Ørsted,” said Anders Opedal, CEO of Equinor, in announcing the stock position. “This is a counter-cyclical investment in a leading developer, and a premium portfolio of operating offshore wind assets. The exposure to producing assets complements Equinor’s operated offshore wind portfolio of large projects under development.”