Big oil firms shun new investment as UK is rocked by energy crisis and gas prices soar
Shocking figures show investment in oil at a 15-year low, despite the UK facing an energy crisis this winter.
Oil firms have cut exploration and drilling amid pressure from environmental, social and governance (ESG) investors and climate change activists, according to data from online broker AJ Bell.
It comes as the UK stands on the cusp of an energy shortage, which some experts predict could increase bills by £2,000 per year and be worse than the financial crisis.
Oil firms have cut exploration and drilling amid pressure from environmental, social and governance investors and climate change activists, according to data from AJ Bell
Investment by some of the world’s largest oil firms as a percentage of sales is predicted to be just 6.3 per cent, compared with a peak of 13.1 per cent in 2015.
In monetary terms, investment peaked in 2013 at £149billion. However, the figure for 2021 is predicted to be closer to £56.6billion, a fall of 62 per cent.
The data includes spending from UK oil giants BP and Shell, as well as US majors Exxon Mobil and Chevron.
AJ Bell investment director Russ Mould said the decline ‘suggests Big Oil is not drilling or exploring with anything like its old vigour’ and is instead focusing on renewables as well as paying back cash to shareholders.
BP boss Bernard Looney (pictured) said he would work to cut its oil and gas production by 40% by the end of the decade
With gas prices soaring to record highs this winter, political pressure is piling up on oil firms as governments and activists increasingly push to block new fossil fuel projects to curtail carbon emissions and hit net zero targets over the coming decade.
Shell this month pulled out of plans to develop the Cambo oil field off the coast of the Shetland Islands after fierce opposition.
Siccar Point Energy, a private-equity backed oiler also working on Cambo, said the project was being paused as it evaluated its next steps.
The move raised questions over the viability of new oil and gas projects in the North Sea.
In October, Shell was denied permission to develop the Jackdaw gas field in the North Sea.
Many banks and institutions are increasingly reluctant to fund the development of new oil and gas projects.
ABP, from the Netherlands, one of the world’s largest pension funds, has said it will sell all of its holdings in fossil fuel companies, worth over £12.8billion, to protect its retirees from the effects of climate change.
Agitation for change is also coming from the boardroom, with BP boss Bernard Looney saying last year that he would work to cut its oil and gas production by 40 per cent by the end of the decade.
He has also backed plans to ban sales of new petrol and diesel cars by 2030.