Rating agency, S&P, has warned several oil majors that they could be downgraded within weeks because of increasing competition from wind and solar.
By Marc Allen, Maritime Direct UK.
S&P has warned a swathe of oil and gas companies that they will be downgraded in coming weeks, reports the Guardian. The agency says increasing competition from renewable sources, a shift away from fossil fuels and volatile markets are to blame.
Major players Chevron, Exxon Mobil, Imperial Oil, Royal Dutch Shell, Shell Energy America, Canadian Natural Resources, Conoco Phillips, and Total all face a reduction of their credit rating. S&P said it also had a negative outlook for BP and Suncor, and Australia’s Woodside was also at risk.
If the index implements a ‘two-notch downgrade’, this will put Woodside at BBB, one notch above a junk rating. Woodside shares fell 3.25% on Wednesday morning. S&P is also looking at the standing of China Petrochemical Corp, China Petroleum & Chemical Corp, China National Offshore and CNOOC
Overall, the entire fossil-fuel industry faces an increased risk rating and could see its status shift from ‘intermediate’ to ‘moderately high’. In a statement, S&P said: ‘In particular, we note significant challenges and uncertainties engendered by the energy transition… we cannot exclude a combination of the industry risk revision and other material factors leading to a two-notch downgrade, especially given the potential for negative surprises…’
In a further sign of the shift towards renewables, the world’s biggest funds manager, Black Rock, said it may offload shares in big greenhouse gas emitters in support of the Paris Accord.
Chief Executive, Larry Fink said: ‘I believe that the pandemic has presented such an existential crisis – such a stark reminder of our fragility – that it has driven us to confront the global threat of climate change more forcefully and to consider how, like the pandemic, it will alter our lives.’