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Europe Oil Giants Shunning Oil Business In Favor Of Clean Energy

The uncertainty that has clobbered the oil industry is forcing oil giants in Europe to rethink their core business and future. Amid the increased focus on renewable energy to combat climate change, oil giants have started tweaking their operations, venturing deeper into the renewable energy business. Royal Dutch Shell plc. ADR (NYSE: RDS.A) of the Netherlands and France’s Total have ramped up investments in wind and solar energy battered as they seek to safeguard their future.

Renewable Energy Transition

Royal Dutch has already started working on a mega wind farm off the coast of the Netherlands. This marks a surprise shift from the oil business that has been a key driver of value. France’s Total on its part has started working on solar power in Spain and wind farms in Scotland.

Shell and BP plc. (NYSE: BP), on the other hand, have increased investments towards electric vehicle charging, having become clear that the future will be all about electric vehicles.

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In addition, oil majors are increasingly shedding their investments towards new projects. With oil prices struggling to raise past the $50 a barrel level, most companies continue to ditch plans to drill more oil wells. Shell, for instance, has already ditched plans to drill oil in the Gulf of Mexico. BP, on its part, is no longer interested in pursuing oil in new countries.

Climate Change Pressure

The shift comes amid growing pressure from governments and environmentalists for oil companies to play a big role in addressing climate change concerns. Faced with stringent regulations, the companies have had to increase focus and investments towards cleaner energy as they seek to safeguard their long term prospects.

A plunge in oil demand and price in the aftermath of the COVID-19 pandemic and a collapse of earnings has forced oil companies to look elsewhere for opportunities for growth or face the risk of extinction. Similarly, the companies have started promoting the use of natural gas wind and solar energy.

While European oil giants are increasingly venturing into cleaner energy, their U.S counterparts cannot say the same. For instance, Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX) are reluctant of making changes towards climate-related goals.

Ruchi Gupta

Ruchi Gupta covers various beats from finance to technology and from lifestyle to hobbies. She has an MBA in Finance. Ruchi enjoys writing on celebrities and political news. She likes traveling and exploring places.

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