Big Oil’s painful offshore wind pivot
DEEP-DIVE: European oil majors throw caution to the wind by embracing razor-thin margins
European oil majors are jostling to become offshore wind heavyweights. Building capital-intensive projects at scale in familiar offshore environments, underpinned by guaranteed returns, has proved alluring. But cost inflation and aggressive bidding at cut-throat ‘subsidy-free’ auctions have eviscerated margins. Energy Flux takes a critical look at new research into the sketchy economics of offshore wind for the likes of Equinor, Shell, BP and ENI.
Offshore wind is the new darling of the European oil industry. The biggest names in petroleum have amassed gigawatt-scale development pipelines and frequently scrap it out for seabed acreage in premium markets in western Europe and North America. Several are also entering emerging Asian markets via local joint ventures.
Barely a week goes by without some sort of announcement from a European oil major about its deepening involvement in the sector. They all hope to emulate the metamorphosis of Denmark’s state oil company DONG Energy into Ørsted,…