The prospect of a tighter oil and gas market this decade will not derail Equinor’s commitment to building up its portfolio of renewable energy projects, according to chief executive Anders Opedal.

Noting an anticipated decline in demand for oil after 2030, Opedal said on Wednesday that the Norwegian energy giant will not prioritise hydrocarbon projects over renewables despite significantly higher expected returns for future oil and gas projects.

Equinor demands returns of 10% on oil and gas projects when the oil price averages just $30 per barrel — much lower than the $65 per barrel average in the company's current projections — while future wind energy projects are expected to generate returns of 5% to 6%.

However, during a digital press meeting, Opedal told Upstream that Equinor will increase its share of renewables despite what it expects will be a tighter market for oil and gas throughout this decade.

“Our investments in renewable [energy] will increase substantially over time, and the balance between oil and gas and renewables will even out more. This will happen independently of the oil price, as we need more robust projects even if we see short spikes in the oil price,” he said.

Opedal explained that Equinor sees a gradual increase in oil demand towards 2030 but then expects a reduction in demand over time.

“We are building up a portfolio that enables us to capture the growth in oil demand while we are building robustness in the portfolio,” he said, adding that a large share of renewables will “enable the company to maintain cash flow when oil and gas [demand] starts going down”.

At Equinor's full-year results presentation on Wednesday, Opedal revealed that its giant Johan Sverdrup oilfield offshore Norway will have paid for itself by the end of the week — just 16 months after first production, in October 2019.

Asked by analysts how renewables can compete with such returns, Opedal said: “I wish there were more Sverdrups. It is an outstanding asset. However, not all assets have the same returns.”

Meanwhile, Germany's RWE, UK supermajor BP and France's Total were among the winners this week in the UK’s first major auction of offshore wind farm leases in more than a decade.

Opedal declined to say if Equinor had participated in the UK offshore wind round but did acknowledge that Equinor is noticing strong and increasing competition in the offshore wind sector.

Opedal said the company sees growing opportunities in international markets other than the UK.

“We see new competitors coming in and increasing competition, but we remain confident that we can be competitive in the areas where we select to compete,” he said.

That includes technology, the chief executive said, citing floating offshore wind power as an example.

Equinor had previously set ambitions for profitable growth within renewables and expected to reach installed capacity of 4 gigawatts to 6GW by 2026 and 12GW to 16GW by 2035.

However, in November last year, the company said it now plans to expand its acquisition of wind acreage in hopes of accelerating profitable growth.