Repsols Seeing Green

Image source: Angel L - Shutterstock

What's going on?

Repsol announced on Wednesday that its selling a stake in its oil and gas business.

What does this mean?

Oil companies know they need to clean up their emission-exuding acts if they want to keep investors sweet, but they also know dirtier traditional fuels make them the dough they need to pay their shareholders and fund clean energy initiatives. Thats a tricky balance to strike, but it looks like Repsol mightve struck it: Spains biggest oil and gas producer announced on Wednesday that its selling 25% of its traditionally-focused exploration and production business to specialist energy investor EIG (tweet this). The nearly $5 billion-dollar deal means itll still have a hand in world-fueling oil and gas, while also helping it fund the build-out of its low-carbon business thatll invest in things like wind farms and renewably-made hydrogen.

Why should I care?

Zooming in: Repsols open-minded.
Rival oil companies like Shell and BP have so far resisted investors pleas to cash in on the value of their traditional business, instead insisting theyre better off as integrated companies. But Repsol the first big oil company to attempt a deal like this is committed to hitting net-zero emissions by 2050, and even wants its low-carbon businessto make up nearly half of all its investments by 2030. That means Repsol will have to raise more cash or distance itself further from fossil fuels, which might be why the deal includes the potential listing of the business on the US stock market from 2026.

The bigger picture: Fossil fuels are has-beens.
Repsol might be right to branch out from fossil fuels: the price of oil dropped below $85 a barrel on Wednesday for the first time since January, wiping out the gains from earlier this week when OPEC+ a group of oil producing nations announced a cut in production. After all, waning global demand is putting extreme pressure on the oil price, even as Russian elixir stays in short supply.

Originally posted as part of the Finimize daily email.

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