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7 big oil firms wipe £66bn off value of fossil fuel assets

The world’s largest listed fossil fuel companies have slashed the value of their oil and gas assets by £66 billion ($87bn) in recent months as the coronavirus pandemic accelerated the pace of the clean energy transition.

These trends are expected to continue as other companies realise the potential impacts. The news should come as a warning signal to fossil fuel firms that aren’t following suit, and customers who continue to invest in them, as they could soon see their assets stranded.

Global lockdowns triggered the sharpest collapse in demand for fossil fuels in 25 years, causing energy commodity markets to crash to historic lows. But the analysis, from climate financial thinktank Carbon Tracker, also shows the trend began even before the pandemic took hold, with six firms slashing the value of their assets in the final quarter of 2019, including Chevron writing down values by much as £9.9 billion ($13bn).

Carbon Tracker’s report shows that in the last three month alone, companies including Royal Dutch Shell, BP, Total, Chevron, Repsol, Eni and Equinor reported downgrades on the value of their assets totalling almost £42 billion ($55bn).

The thinktank welcomed oil majors’ moves to revise the valuation of their assets in line with projections of lower longer-term oil prices, which it said would help reduce investors’ exposure to stranded asset risk.

But not all firms are following suit. The analysis figures reveal Norway’s Equinor and the USA’s ExxonMobil and ConocoPhillips have failed to report any significant valuation in the second quarter of 2020, disregarding the realities of the clean energy transition.

Equinor, for instance, has stuck to its long-term forecasts for the price of Brent crude at $80 a barrel, which will likely be to the detriment of their investors. Analysists predict continuing in such a manner will expose investors to significant stranded asset risks, potentially destroying shareholder value.

Carbon Tracker has warned investors for more than a decade that high carbon assets could become stranded as the energy transition picks up pace and oil prices shrink.

Take Action

Now is the time to reassess your finances, banking, pensions and investments. Andrew Grant, Carbon Tracker’s head of oil, gas and mining, said the coronavirus has accelerated an inevitable trend towards lower oil prices. This could lead to stranded assets and a deepening risk for pension funds that invest in oil firms. Make the switch now to pensions, banks and investments that have a sustainable, long term and climate focused future.

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