What is slowing down energy transition in the oil and gas industry?

The shift is seen to progress at a slower pace.

Concerns about energy security, fuelled by the Ukraine war, have caused oil and gas companies to prioritise fossil fuels, slowing down their efforts to transition to cleaner energy, according to GlobalData.

Ravindra Puranik, oil and gas analyst at GlobalData, also said that after setting energy transition targets in 2020, the hype among oil and gas companies subsided going into 2024.

“Profitability issues and inflation, along with high interest rates are causing uncertainties in undertaking renewable projects,” Puranik said.

Whilst this trend is expected to continue, GlobalData said the switch towards clean energy will still take place but at a slower pace.

The company said solar and wind power are leading the transition as oil and gas companies venture in renewable power generation as part of their energy transition endeavour. 

“Efforts like carbon capture predominantly work to mitigate emissions, whilst hydrogen production, renewable power, and low-carbon fuels offer end-consumers alternatives to fossil fuels,” GlobalData said.

“Energy storage, mostly in the form of batteries, is another transition avenue being explored by the oil and gas industry,” it added.