The oil super majors have eyed shifting their primary stock exchange listings to New York as a stronger push to reduce fossil fuels in their home markets weighs on their share prices.
There’s a yawning gap between the valuations of US oil and gas majors and their UK and European counterparts. That’s prompted a debate over whether the more lowly-rated energy giants should switch their primary stock exchange listing to New York.
The push to move away from fossil fuels is weighing on the share prices of Europe and Britain’s oil giants.BP has said a move is not on its agenda, but would inevitably have done some analysis on it. There’s also been speculation that its relatively low sharemarket valuation could make it a target for one of the more highly-rated oil giants, which could effectively produce a transfer of its listing.
While the market dynamics have seen some UK and European companies, particularly tech and biotech companies, shift their listings to the US, they are not the primary reason energy companies have considered the move. BP, for instance, had a 2020 plan to cut its oil and gas production by 40 per cent by 2030 from 2019 levels.to 25 per cent by 2030, with the 35 to 40 per cent target for its own carbon emissions revised to between 20 and 30 per cent.
The backlash against BP and Shell was strong because European and UK fund managers, retail investors and their governments are far more committed to environmental, social and governance policies than most of the US fund managers and other investors. When BP unveiled its new timetable for its response to climate change, it said that it generates returns on investment of 15 to 20 per cent from its fossil fuel projects. The returns from bioenergy were about 15 per cent, but were only 6 to 8 per cent from renewables like solar and wind. It’s not surprising that it decided to invest more in oil and gas and biofuels than in renewables.
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