(Bloomberg) – Equinor ASA reined in its renewable-energy ambitions, less than two months after snapping up a $2.3 billion stake in Danish wind giant Orsted A/S.
The Norwegian company lowered its 2030 target for renewable generation capacity and reduced planned investment in low-carbon projects. Rivals including BP Plc and Shell Plc are also returning their focus to the core oil and gas business as they seek to shore up cash for dividends and buybacks.
Equinor will be “high-grading the portfolio, reducing the investment outlook for renewables and low-carbon solutions and improving cost across our organization,” Chief Executive Officer Anders Opedal said in an earnings statement.
It’s a striking pullback, coming so soon after Equinor effectively endorsed the beleaguered offshore-wind industry when it completed the Orsted deal in December. Orsted shares have tumbled by more than a third since the tie-up was announced.
Equinor on Wednesday increased its forecast for growth in oil and gas production, while reducing its 2030 target for renewables capacity to 10 to 12 gigawatts, from as much as 16 gigawatts previously. It will cut investment in low-carbon solutions and renewables to $5 billion up to 2027.
“The scale-back on renewables ambitions and associated spending will be in focus today,” DNB analyst Steffen Evjen said in a note to investors. “Equinor has delivered what investors expected” in that regard.
The shares rose as much as 1.5%, then pared gains to trade up 0.4% as of 10:31 a.m. in Oslo.
Orsted, RWE
Larger European competitor Shell kicked off earnings for the majors last week, writing off almost $1 billion after withdrawing from a US offshore wind farm. But it’s not just oil companies curbing their renewables growth. Orsted last year cut a 2030 target for green power project construction. And utility RWE AG said in November its plan to spend €55 billion ($57 billion) on green technologies by 2030 may face delays.
Equinor posted a 25% increase in fourth-quarter earnings, saying adjusted operating income after tax jumped to $2.29 billion, beating analyst estimates. That reflected gains in natural gas prices in Europe, a region that bought record amounts from Norway last year in a bid to replace Russian supplies.
It raised the quarterly ordinary dividend to 37 cents and announced a share buyback program of as much as $5 billion for this year.
