As the oil and gas industry faces upheaval amid global price gyrations and catastrophic climate change, private equity firms have stepped into the fray, reports the New York Times
(14 October, Tabuchi). Since 2010, the private equity industry has invested at least US$1.1 trillion into the energy sector — double the combined market value of three of the world’s largest energy companies, Exxon, Chevron, and Royal Dutch Shell. The overwhelming majority of those investments was in fossil fuels, according to data from Pitchbook, a company that tracks investment, and a new analysis by the Private Equity Stakeholder Project, a nonprofit that pushes for more disclosure about private equity deals. Private equity investors are taking advantage of an oil industry facing heat from environmental groups, courts, and even their own shareholders to start shifting away from fossil fuels. As a result, many oil companies have begun shedding some of their dirtiest assets, which have often ended up in the hands of private equity-backed firms. By looking to pick up riskier, less desirable assets on the cheap, the buyers are keeping some of the most polluting wells, coal-burning plants, and other inefficient properties in operation. At the same time banks, facing their own pressure to cut back on fossil fuel investments, have started to pull back from financing the industry, elevating the role of private equity.
From "Private Equity Funds, Sensing Profit in Tumult, Are Propping Up Oil"
Abstract News © 2021 SmithBucklin