Energy transition raises credit risk for oil frms

摘要

The energy transition is increasing credit risks for oil and gas frms, opening even national oil companies (NOCs) up to climate activist pressures via debt markets. Large oil frms have historically been able to beneft from lower fnancing costs as their size and scale help boost their credit ratings. But with the rise of environmental, social and governance investing, their borrowing costs have started to rise, while those for renewables project are falling. Cost of capital for a long-cycle oil project is around 20pc, versus 5pc for renewables. Italy’s Eni and Spain’s Repsol plan to spin of their renewables divisions to secure them lower- cost fnancing, because even the frms leading the oil industry’s energy transition drive are still seen as hydrocarbon companies for credit rating purposes.