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Survey shows likely energy transition paths for oil and gas companies

Important and different pathways to meet climate goals and keep oil prices stable are revealed.

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The pathways to decarbonization are many. Deloitte’s latest survey-based study, “Oil and gas business in a low-carbon world,” highlights four main pathways: “Net-zero pioneers” and “green followers” are now setting their sights on green energy, while “low-carbon producers” and “hydrocarbon stalwart” will likely continue to focus on fossil fuel production, but with many of the latter doing so on a decarbonized basis. Each pathway is expected to be important to meet climate goals and keep oil prices stable while the transition is ongoing. The study findings are based on a survey of 100 C-level executives at global oil and gas companies, including integrated, U.S. pure-play, multinational exploration and production and state-owned oil and gas companies.

  • Oil and gas companies see competing strategies for energy transition, with four key strategic decarbonization pathways emerging across the industry.
  • 47% of oil and gas executives surveyed are currently mapping out near-term decarbonization strategies.
  • 5% of respondents are already shifting to green portfolios.
  • 30% of respondents currently envision remaining solely focused on oil and gas by the 2040s.

Many oil and gas companies are needed to supply the remaining demand outlook while others will play a big role in enabling the successful energy transition. 

  • Net-zero pioneers with net-zero targets and a bold vision to divest their hydrocarbon business model built over decades—especially at an oil price of $75/bbl—could create and unlock significant value through capex redeployment, valuation uplift and divestment proceeds.
  • Green followers with an ultimate goal of going green could realize significant financial gains by monetizing their traditionally higher reserves-to-production (R/P) ratio in the near term and using this revenue to make a big foray into the green business at a reduced risk in the medium term.
  • Low-carbon producers could create new value by streamlining their portfolio, decarbonizing their business and optimizing their operations.
  • Hydrocarbon stalwarts with the capability to remain the last-standing suppliers have the potential to gain value through increased market share. 

The survey finds the transition will likely play out over time, driven by fundamentals, technology maturity and stakeholder pressures.

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