Page 12 - EurOil Week 04 2021

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S&P warns of oil and gas

downgrades

UK RATINGS agency S&P has warned it could COVID-19 impacts in 2020.”
downgrade 13 oil and gas companies within The agency also changed its outlooks for BP
Forecasters have weeks, in light of rising competition from renew- and Suncor Energy from stable to negative.
slashed their predictions able energy.
for long-term oil prices. Forecasters have slashed their predictions for Investor pressure
oil and gas prices in response to the coronavirus Oil and gas producers have also seen some inves-
(COVID-19) pandemic and increased global tors shy away because of climate concerns.
efforts to decarbonise. Some oil firms such as S&P’s downgrade warning came as Black-
BP have even predicted that oil might never Rock, the world’s biggest investment fund man-
to recover to pre-pandemic levels. The bleak ager, threatened it would shed stock in the worst
outlook means many assets once thought of as corporate polluters, to put pressure on them to
promising now risk being stranded. address their emissions.
On S&P’s credit watch are international BlackRock CEO Larry Fink has asked com-
majors Chevron, ConocoPhillips, ExxonMo- panies that the group invests in to disclose their
bil, Royal Dutch Shell and Total, as well as Shell plans for reaching net-zero emissions. The inves-
Energy America, Exxon subsidiary Imperial tor could pull out of companies that fail to take
Oil, Canadian Natural Resources and Austral- action.
ia’s Woodside Petroleum. Chinese state-owned BlackRock held some $8.7 trillion in shares,
China Petrochemical Corp, China Petroleum bonds and other holdings at the end of Decem-
& Chemical Corp, China National Offshore Oil ber. But a mere $616bn of its assets are currently
Corp and CNOOC Ltd were also put on notice. managed with environmental, social or govern-
Explaining the move, S&P pointed to “signifi- ance (ESG) criteria taken into account.
cant challenges and uncertainties engendered by The coronavirus pandemic, Fink said, has
the energy transition, including market declines brought climate change to the forefront of inves-
due to the growth of renewables.” It also cited tors’ minds.
“pressures on profitability, specifically return on “I believe that the pandemic has presented
capital, as a result of high dollar capital invest- such an existential crisis – such a stark reminder
ment levels over 2005-2015 and lower average oil of our fragility – that it has driven us to confront
and gas prices since 2014.” the global threat of climate change more force-
Oil and gas volatility, both now and poten- fully and to consider how, like the pandemic,
tially in the future, is also a factor at play, S&P it will alter our lives,” he said. “No issue ranks
said. higher than climate change on our clients’ lists
“In most cases, at this point we do not antici- of priorities.”
pate downgrades of more than one notch solely BlackRock has faced pressure from environ-
as a result of the industry risk review,” S&P said mentalists to do more to improve its record in
in a statement on January 26. “This said, we tackling emissions. Similarly HSBC, Europe’s
cannot exclude a combination of the industry biggest bank, also faces calls from investors to
risk revision and other material factors leading stop funding fossil fuels and commit to binding
to a two-notch downgrade, especially given climate targets. A motion will be put towards
the potential for negative surprises after the shareholders for vote in April. ™

P12 www. NEWSBASE .com Week 04 28•January•2021