Equinor unveils fast-tracked transition plan
Norway's Equinor is stepping up efforts to reduce its emissions under a new strategy that the state oil company presented on June 15.
Equinor said it aimed to reduce its carbon intensity by 20% by 2030 and by 40% by 2035, on the way to reaching net zero by 2050. It also plans to ramp up investments in renewables and low-carbon solutions to more than 50% of annual capital spending by 2030, versus 4% in 2020, while delivering a 12% return on average capital employed over the next ten years.
The company expects to generate around $35bn in free cash flow in 2021-2026, and will increase its quarterly cash dividend to $0.18/share while introducing a new share buy-back programme.
“Our strategy is backed up by clear actions to accelerate our transition while growing cash flow and returns," Equinor CEO Anders Opedal said in a statement. "We are optimising our oil and gas portfolio to deliver even stronger cash flow and returns with reduced emissions from production, and we expect significant profitable growth within renewables and low carbon solutions. This is a strategy to create value as a leader in the energy transition."
Equinor's focus on carbon intensity rather than absolute volumes of emissions gives it room to continue expanding oil and gas production. The company said last year it was targeting annual growth in oil and gas output of around 3% between 2019 and 2026. But Opedal said this week that "in the longer term, Equinor expects to produce less oil and gas than today recognising reducing demand," without elaborating.
The company said its optimised oil and gas portfolio would deliver $45bn in free cash flow after tax and investments between 2021 and 2026, and that new projects coming online by 2030 would have a breakeven price of below $35/barrel and a short payback time of under two and a half years.
Renewables will receive $23bn in investment in 2021-2026, as Equinor targets 12-16 GW of clean power generation capacity by the end of the decade. It also wants to develop 15-30mn metric tons/year of annual CO2 storage capacity by 2030 and produce clean hydrogen in three to five clusters.