Energy transition ambitions of four national oil and gas companies in South America

Abstract

This report explores what (if any) diversification strategies national oil and gas companies (NOGCs) are employing to engage in an energy transition, with a focus on four South American countries: Argentina, Brazil, Colombia and Ecuador.The authors identify how four South American NOGCs are preparing to transform in the face of climate change and the energy transition. They do so by looking at these companies’ publicly stated ambitions regarding diversification: they focus in particular on whether and how these companies are leaving fossil fuels behind, as a sign of transforming their core business and moving towards a more structural transformation overall in society. The four South American NOGCs are Ecopetrol (Colombia), Petrobras (Brazil), Yacimientos Petrolíferos Fiscales (YPF, Argentina) and EP Petroecuador (Ecuador). While all four companies are controlled by their national governments, three are also public companies that are traded on domestic and international stock markets. This report can serve as a resource for comparative analysis and to inform transition strategies in oil and gas–producing countries, for energy and finance researchers, professionals working within NOGCs, and policymakers shaping NOGCs’ missions, strategies and investments. Key messages National oil and gas companies, or NOGCs, must transform to survive and fit into a new global dynamic for mitigating the impacts of climate change. While navigating their roles in generating public revenue and domestic employment, enabling public services, and other characteristics, they will also have to overcome institutional barriers in order to accelerate their diversification into non-fossil fuel businesses. Diversification to new low-carbon businesses is a part of but not the priority for decarbonization for four of South America’s NOGCs. These four South American NOGCs have limited capacity to expand into new low-carbon businesses. More research is needed to assess and strengthen South American NOGCs’ preparedness for a transition to a low-carbon future, including factors such as financial, technical and managerial capabilities, and their role in national and global political economies.