It may seem that the ongoing energy crisis in Europe has given the oil industry some of its confidence back. There is almost a kind of “what did I say” atmosphere: – I am a proud hydrocarbonist, said investor Tor Olav Trøim on Wednesday at this year’s Pareto conference in Oslo. The energy conference brings together around 2,000 participants from finance, oil, oil services, renewable energy and the press. The meeting place is seen as one of the most important places where money finds investment. Trøim, who is an experienced man in the energy industry and the former gun bearer of John Fredriksen, spared no expense. In what was undoubtedly the most talked about post of the day, he lashed out at banks, politicians and others who “just hate” fossil energy. – We supply 84 percent of the energy in the world. So good luck with their 16 percent, he said, with a clear reference to renewable energy. Difficult to borrow money According to Trøim, what is called ESG, the English abbreviation for environmental, social and business ethics, has led to a reluctance to put money into fossil energy. He has noticed himself that it has been difficult to borrow money, because banks have a clear strategic line not to lend money for oil-related projects. There is no reason to doubt it. Certain banks, funds and others with money have exited fossil energy, in order to be in line with ESG requirements from customers and owners, among others. He believes it has led to a completely wrong placement of money, out of fossil energy and into renewables. “Hell” This “mistake”, the consequences of which can be seen through the energy crisis in Europe, will take a long time to correct. – It has been hell to be an energy investor in the last four years. It’s been hard to get up in the morning, even. (…) It’s shocking, it’s really shocking. The statements provoked both laughter and applause. Many in the room nodded and agreed. Perhaps they felt they were getting some redemption after several years of shame. Several recognized themselves, and had themselves struggled to find money for projects that did not meet the ESG standards. Corrected “wrong impression” A few weeks ago, we could read in Dagens Næringsliv that Equinor top Irene Rummelhoff believed that the energy crisis was not due to the Ukraine war, but to a lack of investment – and that “rhetoric” from politicians and other players had contributed to just that . Irene Rummelhoff in Equinor Photo: Marit Hommedal / NTB The statement did not go unnoticed by the environmental organisations, which in turn led to Equinor having to intervene and correct an “erroneous impression” that Rummelhoff spoke about opponents of petroleum or climate organisations. Fair enough, but she is still onto something that cannot be avoided, namely that there is a strong imbalance in the energy markets. Long before the war in Ukraine broke out, and sanctions against Russia led to the throttling of Russian gas, the problems had risen well above the surface. The problem was there before the war The war worsened a problem that was there from before. In the autumn of 2021, i.e. half a year before the war broke out, I wrote, among other things: “Europe is facing an energy crisis into the winter. The prices of gas are sky high, partly because there is little gas in stock after the cold winter last year. Nor is there enough coal. In recent years, Europe has become increasingly dependent on solar and wind energy, as climate and environmental measures to slow down and stop nuclear or coal power have been rolled out. Then you have little extra energy to play with in periods with, for example, little wind – and then electricity prices also skyrocket.” The point here is not to show that I was early to see something that no one else saw, quite the contrary; all the media wrote about this. The energy crisis was brewing even before the war. Photo: Øystein Otterdal / Øystein Otterdal Painful winter The war threw Europe even deeper into the energy crisis, and serious weaknesses in the European energy security situation have come to light. Europe is completely dependent on Russian gas, and needs several years to become independent. Winter is going to be painful. Rationing, shutdown of industry and economic downturn are on the way. In the wake of Europe’s desperate search for energy, oil and gas companies have experienced both an economic upswing and a boost in terms of reputation. A key player told me at the ONS energy fair in Stavanger that “it’s great to see that the industry has finally regained its confidence and self-image”. Weaknesses in the strategy The energy crisis we are facing has started the discussion about whether we have switched too quickly to renewable energy sources, while at the same time we have rushed to phase out other energy sources. It is easy to look in the rearview mirror and conclude that the strategy has not been perfect. However, most agree that we cannot take a step back on renewables now. The world needs more renewable energy, while we also need a lot of oil and gas for many years to come. Laughing at and understating the importance of renewable energy is perhaps the very worst strategy.
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The oil industry has regained its confidence – Statement
