IN AMERICA Big Oil remembers BP’s attempt to go “Beyond Petroleum” in the 2000s as a toe-curling embarrassment. In Europe it is seen as being ahead of its time. Once again the oil industry is experimenting with cross-dressing. Statoil, a Norwegian oil firm, is abandoning a name given to it almost 50 years ago to become the wispier Equinor. The firm formerly known as Dong, for Danish Oil and Natural Gas, is now Ørsted, a big wind firm named after the founder of electromagnetism.
Royal Dutch Shell and Total, Europe’s biggest private producers, are (mercifully) not changing their names. But they are toying with a strategy that could be far more adventurous—moving their core businesses from hydrocarbons to electrons.
Amid pressure to limit climate change, and the growth of renewable energy and electric vehicles (EVs), they expect low-carbon electricity to become a much bigger part of the world’s energy mix within the next few decades. They have already invested heavily in building global natural-gas businesses for cleaner power generation. Now they plan to take on utilities in deregulated markets to provide electricity and gas direct to homes and businesses.
Last month Shell completed the acquisition of First Utility, a midsized British gas and electricity supplier that already operates under the Shell brand in Germany. The Anglo-Dutch firm plans to make a similar move in Australia. Late last year Total launched the supply of gas and green power to households in France, through its Total Spring brand. Both have invested in renewable energy and are installing EV charging points in their networks of petrol stations. “We don’t see how we can be an energy major if we don’t become a significant player in electricity,” says Maarten Wetselaar, head of gas and new energies at Shell. A Total executive says: “Why should we limit ourselves to selling gas to a utility when we can sell to end-customers?”
At first glance the shift could be considered a shrinking of horizons. These firms are global beasts with vast balance-sheets. Customer-facing utilities are minnows by comparison. Centrica, the biggest of Britain’s Big Six, is worth £7.6bn ($10.8bn), compared with Shell’s market value of £190bn. They often operate in only one or two national markets, each a regulatory minefield. Bill-paying customers tend to loathe them far more than they do the purveyors of petrol and pain aux raisins.