OPINION: Upstream’s sister publication Recharge posed an interesting question recently: at what point does a fossil fuel player shed its oily skin to become, in essence, a renewable energy company?

The question was prompted by the latest move into offshore wind by Norway's Equinor, an early mover in the energy transition.

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The answer to the question — “not yet” — implies that Equinor is moving inexorably along the road to such a status.

Impressions of a forced march toward net-zero emissions were reinforced by an International Energy Agency (IEA) report in May that said new oil and gas developments should not go ahead if global targets on climate change are to be met.

Since then, however, Upstream has been awash with stories about new Equinor oil projects, ranging from giant floaters in Brazil and Canada, to long-stalled schemes in Norwegian waters.

To the casual observer, with an eye on rising oil prices, this might look like a case of conflicting signals but this is not necessarily true.

Most European oil companies are getting better at communicating their strategies for energy transition, and there is growing convergence on the vision.

In last week’s capital markets day update, Equinor outlined plans to exit 15 countries and gave clear explanations of which categories of projects will no longer be of interest and why.

Offshore field developments such as Bacalhau in Brazil and Bay du Nord in Canada were highlighted as offering rapid payback and returns of around 20% with breakevens of around $35 per barrel of Brent crude.

Equinor set out a path where strict limitations on capital allocation to the oil and gas sector mean that expected windfalls from higher oil prices can fund the quest for profitable clean energy and help keep shareholders happy along the way.

The road to energy transition will require the mother of all rebranding campaigns for big oil, but transformation into renewable energy companies is not a mirage. Equinor’s example shows a credible path.

(This is an Upstream opinion article.)