Most state-controlled Latin American oil companies are trailing their counterparts in their efforts to reduce emissions as the global energy industry moves toward a less carbon-intensive model, according to a new study from Moody's Investors Service.
The report, which assessed 20 national oil companies around the world, reported a mixed bag of energy transition activities. However, regionally, with the exception of Argentina's YPF Sociedad Anónima, Latin America's national oil companies are generally lagging in their strategies to combat climate change in the wake of the Paris Agreement on climate change.
The study shows that Brazil's Petróleo Brasileiro SA - Petrobras, while recently joining the Oil and Gas Climate Initiative, has only "marginally" invested in wind and solar energy. Similarly, while adopting strategies to cut emissions in line with its own reduction goals, Colombia's Ecopetrol SA has no strategy to meet the goals of the Paris Agreement.
While making progress on slashing its methane emissions, Petróleos Mexicanos SA de CV has not made any large investments in alternative energy or carbon sequestration due to a combination of massive debt and taxation as well as a new thrust to boost sagging oil and natural gas production, the report said.
By contrast, in Europe, Eni SpA, which is about 30% owned by the Italian government, is looking to reduce its carbon footprint and said in March that it would spend €1 billion in the next four years to help achieve a net zero-emissions target by 2030. Eni will develop a clean power business, spending €1.4 billion from 2019-2022 to grow its renewable energy capacity.
Norwegian state-controlled Equinor ASA's emissions are already significantly below the industry average, the Moody's report said. In March, Equinor reported that it had cut its CO2 emissions by 264,000 tonnes in 2018. At the same time, Equinor increased its renewable energy production in 2018 to nearly 1,300 GWh.
However, in mid-May at the company's annual general meeting, Equinor shareholders rejected three climate resolutions, one of which was pushing the company to set stricter targets on limiting emissions. The other resolutions looked to reduce Equinor's oil and gas exploration activities.
In Asia, Chinese oil companies China National Petroleum Corp., China Petroleum & Chemical Corp. and CNOOC Ltd. are pursuing emissions-reduction strategies by concurrently increasing natural gas production and transportation activities.
In the last few years, many of the world's top publicly traded oil companies, such as Royal Dutch Shell PLC and Paris-based Total SA, have been ramping up their endeavors to reduce emissions in response to a wave of shareholder activism that is pushing for large energy companies to take more serious action on climate change.