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Our view

The transition plans of Majors are being tested, and the reality of the growth in low-carbon investment required to execute emissions targets is becoming clear. As 2025 nears, companies must align targets with actionable strategies. They can either set plans to achieve their targets - addressing investor concerns by showing low-carbon investment value or adjust targets to reflect continued oil and gas, evidenced by 1H24 production growth and aggressive moves in LNG.

Investors engaging with oil and gas should consider these engagement questions ahead of 2025:

01 Will majors quantify levers to achieve net carbon intensity (NCI) targets?

This includes levers such as offsets, CCS, and divestments. From FY19-23, major NCI reduced by only ~4%, with FY30 low-carbon ambitions insufficient to deliver the emission reduction, leaving up to a 15% gap.

In 2Q24, majors further diverged from targets, expanding LNG portfolios and reaching the highest oil and gas production levels since FY22.

02 How can majors Increase low-carbon investment?

Low-carbon capex hit $2.9bn in 2Q24, a 4% YoY increase, but below the 19% average of the last 3 quarters.

To meet NCI targets, majors must invest an additional $134bn ($19bn p.a.) above current investment targets.

Key findings