Home Energy assets Deals that divert oil and gas assets from climate-engaged companies are on the rise – report

Deals that divert oil and gas assets from climate-engaged companies are on the rise – report

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An employee holds a sample of crude oil at Yarakta oilfield, owned by Irkutsk Oil Co, in Irkutsk region, Russia, March 11, 2019. REUTERS/Vasily Fedosenko/

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LONDON, May 10 (Reuters) – Deals in which oil and gas assets move from companies with climate goals to companies without such goals are on the rise, according to research by the U.S. non-governmental organization Environmental Defense Fund.

A company that removes polluting assets from its balance sheet by selling them may claim a better climate scorecard, but if the assets land in the hands of less scrutinized and climate-committed companies, the overall environmental impact could be negative. .

“When assets move from public to private markets or from operators with environmental commitments to those without, short-term emissions can increase, energy transition planning can fail and climate disclosure can worsen. “, said the Environmental Defense Fund (EDF) in a report. on the study, released Tuesday.

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The study looked at mergers and acquisitions between 2017 and 2021 and different metrics to determine whether assets stayed with companies with targets to reduce their emissions of global warming CO2 and methane.

EDF found that 155 transactions worth $86.4 billion had taken assets away from committed companies to net zero.

He said 211 deals worth $115.6 billion removed assets from companies with explicit methane reduction goals.

“In 2018, transfers with reduced environmental commitment represented approximately 10% of total transactions. In 2021, this percentage increased to 15%,” the report states.

“The proportionate value of deals with reduced environmental commitment also increased from 15% of overall deal value in 2018 to 30% of overall deal value in 2021.”

Transactions that have transferred oil and gas fields from publicly listed companies, which are subject to much stricter scrutiny and higher disclosure pressure from shareholders, media and authorities , to private companies outnumbered reverse transactions.

Oil and gas mergers and acquisitions transactions
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Reporting by Shadia Nasralla; Editing by Susan Fenton

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