Corporate strategies for a new energy transition outlook: advantage Australia?

Abstract

Corporate strategies are adapting to a new energy transition outlook. A likely longer runway for oil and gas demand presents companies with a capital allocation dilemma. With investors seeking sustainable returns, how is the industry balancing near-term upstream reinvestment while planning next-decade strategies? The core upstream business remains the engine of financial resilience. Disciplined investment, in advantaged resource themes, will generate the stable, long-life cash flows that can support growth in new areas and maintain shareholder returns. Building a long-life, low-risk, high-margin portfolio is the current goal. A pivot to gas, decarbonisation and the build-out of material low carbon businesses will however remain a long-term objective. Australia’s upstream sector has a critical role in the portfolios of several global, and local, oil and gas players. A major global supplier of liquefied natural gas (LNG), rising domestic gas demand and a welcoming regulatory environment for low-carbon investments gives Australia several advantages when seeking to attract investment. But how much ‘advantage’ does Australia provide the key oil and gas players that dominate its oil and gas industry? This paper will set out to identify the key corporate strategies being employed in today’s energy environment, the themes driving resilient and sustainable portfolios, and how Australia’s supports these efforts for the world’s, and Australia’s, largest oil and gas companies.