INDUSTRIES

&

MARKETSLow-carboninvestmentsintheoil&gasindustryworldwideCHAPTER

01OverviewShareofgovernmentrevenuefromhydrocarbonsinselectcountriesworldwidein2023Hydrocarbonshareingovernmentrevenue2023,inselectcountriesShareofrevenue30%

40%0%10%20%50%60%70%67%80%SaudiArabiaAngola60%UnitedArabEmiratesAlgeria57%56%54%QatarNorway48%Russia42%Malaysia28%Mexico22%ColombiaIndonesia9%9%3Description:In2023,hydrocarbonscontributedto67percentofthegovernmentrevenueofSaudiArabia.Thisislargelyattributabletooilandgasproductioninthecountry.Incomparison,hydrocarbonsaccountedfor42percentoftheRussiangovernment'srevenuethatsameyear.ReadmoreNote(s):WorldwideSource(s):Axios;CSIS;IMFShareofGDPattributedtooilandgasproductioninselectcountriesworldwidein2023GlobaloilandgasGDPcontributionshare2023,byselectcountryShareofGDP30%0%10%20%40%50%60%SaudiArabiaQatar50%40%40%KuwaitUAE27%Russia19%NorwayKazakhstanIndonesiaCanada14%13%12%10%BrazilNigeria10%10%UnitedStatesColombia8%5%4Description:SaudiArabiahasoneofthehighestoilandgassharesinitstotalGDP.In2023,oilandgasproductioncontributed50percenttoSaudiArabia'sGDP,meaningtheindustryisofsignificantimportancetothecountry'seconomichealth.Incomparison,oilandgasproductionintheUnitedStatescontributedeightpercenttothecountry'sGDP.ReadmoreNote(s):WorldwideSource(s):ClimateAnalytics;E3G;IISD;StockholmEnvironmentInstitute;UNEPAverageannualnetincomefromtheoilandgasindustryworldwidein2022,withaforecastfor2030,byselectcountryandscenario(inbillionU.S.dollars)Globaloilandgasindustry-relatednetincome2022-2030,bycountryandscenarioSaudiArabiaQatarIraqUnitedArabEmiratesAlgeriaIranOmanNigeriaAngolaVenezuela1,2001,000800600400200020222030STEPSscenario2030APSscenario2030NZEscenario5Description:Theaverageannualnetincomefromtheoilandgasindustryworldwideisprojectedtodecreaseinthecomingyears.Forinstance,SaudiArabia'soilandgasindustrygeneratedanetincomeof347billionU.S.dollarsin2022,butthisfigureisexpectedtodeclinebysome19percentunderastatedpolicies(STEP)scenario,andupto47percentunderanet-zero(NZE)scenario.TheSTEPscenarioisbasedoncurrentpoliciesbothalreadyinplaceandunderdevelopmentwhiletheNZE[...]

ReadmoreNote(s):Worldwide;2022Source(s):IEALeadingoilandnaturalgascompaniesworldwidebasedontheirflexibilityandabilitytotransitiontoacleanenergyworldin2022Oilandgascompaniesmostabletotransitiontocleanenergy2022Cleanenergytransitionscoreoutof10012345678910ShellTotalEnergiesRepsolGalp8.997.547.467.47.166.936.796.56BPEniEquinorEneosNeste6.155.96PTT6Description:Accordingtoa2022rankingbyBloombergNEF,Shellistheoilandgascompanymostabletotransitiontowardsacleanenergyfuture,withascoreof8.99outof10.TotalEnergiesandRepsolfollowed,withascoreof7.54and7.46.EightoutofthetenleadingcompaniesareEuropeanentities.Thisrankingconsideredalternativefueltechnologies,investments,andexposuretotransitionrisk.ReadmoreNote(s):Worldwide;2022Source(s):BloombergNEF;RechargeInterimandfinalemissionreductiontargetsoflargestoilandgascompaniesworldwideasof2023Globaloilandgascompanies'climatetargets2023Parameter

consideredScopeReduction

target

-

(baseline

year)BPNetproduction-relatedemissionreduction3'25:10-15%,'30:20-30%,2050:100%-(2019)ChevronEniPortfoliocarbonintensity1to31to31&2'28:71gCO2e/MJ(reductionby>5%)-(2016)Netgreenhousegaslifecycleemissionreduction'30:35%,'35:55%,2040:80%,'50:100%-(2018)ExxonMobilCorporategreenhousegasintensityreduction'30:20-30%,'50:100%-(2016)SaudiAramcoShellNetemissionreduction1&21to3'35:52MtCO2e,'50:100%Netcarbonintensityreduction'24:9-12%,'25:9-13%,'30:20%,'35:45%,'50:100%-(2016)TotalEnergiesLifecyclecarbonintensityreduction1to3'25:15%,'30:25%,'50:100%-(2015)7Description:EuropeanoilandgascompaniestendtohavemoreextensiveclimatetargetsthanNorthAmericanorAsiancompetitors.Forexample,Shellisaimingtoreduceitsnetcarbonintensitybyaroundnineto13percentuntiltheendof2025.Meanwhile,SaudiAramcoislookingtoreducetheirnetemissionsby52megatonnesofcarbondioxideequivalentthrough2035.ReadmoreNote(s):Worldwide;2023Source(s):CarbonTracker;Varioussources(companydata)CHAPTER

02CashflowandcapexCashflowoflargestoilandgascompaniesworldwidein2023(inbillionU.S.dollars)Cashflowofmajoroilandgascompaniesworldwide2023CashflowinbillionU.S.dollarsCash&cashequivalentsattheendoftheyear

Cashfromoperatingactivities40

60

80

10002012014016033.0332.04BPChevron9.2835.6131.57ExxonMobilSaudiAramcoShell55.3753.06143.4238.7754.227.26TotalEnergies40.689Description:SaudiAramcoreportedacashflowfromoperationsupwardof140billionU.S.dollarsfor2023.Thiswasfarmorethantheamountgeneratedbyitsnon-state-ownedcompetitors.However,itscashattheendoftheyearmorecloselyresembledthatofothermajoroilcompanies,suchasShellandBP.ReadmoreNote(s):Worldwide;2023Source(s):Aramco;BP;Chevron;ExxonMobil;Shell;TotalEnergiesTotalandlow-carboncapitalexpenditureoflargestoilandgascompaniesworldwidein2023(inbillionU.S.dollars)Globaloilandgascompanies'low-carboncapexcomparedwithtotal2023CapitalspendinginbillionU.S.dollarsLow-carbonsources20Total25051015303540451.3BPChevron16.3215.830.62ExxonMobilSaudiAramcoShell26.3342.222.6824.395.88TotalEnergies16.810Description:TotalEnergiesistheoilsupermajorwiththegreatestspendingonlowcarbonsources.Inits2023financialyear,theFrenchcompanyspent5.88billionU.S.dollarsincapitalexpenditureonrenewablesandotherlowcarbonsources,outofatotalspendof16.8billionU.S.dollars.Bycomparison,ExxonMobilonlyspent0.62billionoutof26.33billionU.S.dollars.SaudiAramcodidnotspecifyspendingonlowcarbonsourcesatall,althoughitindicatedproductionandshipmentofblue[...]ReadmoreNote(s):Worldwide;2023Source(s):Aramco;BP;Chevron;ExxonMobil;Shell;TotalEnergiesWhatareyourexpectationsforyourfirm'scapitalspendingin2024versus2023?U.S.oilandgasfirms'expectationsoncapitalspending2024,bysectorSmallE&PLargeE&P35%Services30%40%35%30%25%20%15%10%5%34%32%30%22%20%20%19%15%13%11%10%5%4%0%IncreasesignificantlyIncreaseslightlyRemaincloseto2023levelsDecreaseslightlyDecreasesignificantly11Description:Accordingtoa2023surveyofoilandgasexecutives,capitalspendingbyoilandgascompaniesisexpectedtoincreasein2024.35percentofrespondentsfromlargeexplorationandproductioncompaniessaidtheirfirmwouldincreaseit'scapitalinvestmentvolume.Thiscomparedwith47percentofsmallexplorationandproductioncompanies,wholookedtoraisetheirspending.ReadmoreNote(s):December6to14,2023;141respondents;ExecutivesinoilandgasfirmsSource(s):DallasFedCHAPTER

03InvestmentbreakdownDistributionofcashspendingofmajoroilandgascompaniesworldwidefrom2015to2022Majoroilandgascompanies'spendingbreakdown2015-2022Oilandgascapitalexpenditure120%CleanenergycapitalexpenditureDividends*Netdebtrepayment100%80%60%40%20%0%0%13%0%0%0%0%18%0%0%28%0%0%0%7%13%13%27%0%29%0%26%1%39%1%93%87%82%72%71%73%60%47%2015201620172018201920202021202213Description:In2022,majoroilandgascorporationsworldwideprioritizedenhancingshareholderdividendsandreducingdebtcomparedtopreviousyears.Additionally,47percentofprofitswereallocatedtooilandgascapitalexpenditurethatsameyear.Meanwhile,spendingoncleanenergysourcesamountedtomerelyonepercent.ReadmoreNote(s):Worldwide;*Dividendsconsistofsharebuybacksbutexcludeshareissuances.ReadmoreSource(s):IEA;VisualCapitalistEstimatedshareofinvestmentsaimedattraditionaloilandgasbusinessbyoilsupermajorsasof2023BigOil'sprojectedinvestmentshareinoilandgasventures2023Estimatedshareofinvestments30%

40%

50%0%10%20%60%70%80%90%100%ExxonMobil(2022-2027)Chevron(2023)93%86%Shell(2023-2025)TotalEnergies(2023)BP(2023-2025)83%71%56%14Description:Asof2023,ExxonMobilplannedtospend93percentofitsinvestmentbetween2022and2027ontraditionaloilandgasbusiness.Incomparison,BPplannedtoinvestaround56percentofitscapexbetween2023and2025tofurtheritsoilandgasbusiness.ReadmoreNote(s):WorldwideSource(s):Moody's;Varioussources(Companyreports)Cleanenergyinvestmentbytheoilandgasindustryworldwidein2022,asashareoftotalinvestmentGlobaloilandgasindustry'scleanenergyinvestmentasshareoftotal20223.0%2.7%2.5%2.0%1.5%1.0%0.5%1.2%0.0%ShareoftotalindustryinvestmentsShareofglobaltotalcleanenergyinvestments15Description:Theglobaloilandgasindustryinvestedsome2.7percentofitstotalcapitalexpenditureincleanenergiesin2022.Thisrepresentedabout1.2percentofthetotalinvestmentincleanenergygloballythatyear.?Investmentsincleanenergyhavebegunoutpacingfossilfuelinvestmentsinthelastfewyears.ReadmoreNote(s):Worldwide;2022Source(s):IEA;IJGlobal;RystadEnergyLow-carbonfuelsandtechnologiesmostpositivelyviewedbyoilandgasindustryexecutivesworldwideasof2023Globaloilandgasindustry'smostfavoredlow-carbontech2023Shareoftotalrespondents0%5%10%15%20%25%30%35%40%Hydrogen/ammoniaCarboncapture,storage,andutilizationSolar37%37%37%Biofuels,biomass,syntheticfuelsOffshorewind27%18%17%BatterystorageElectricchargingstations,advancedmobilityCriticalmineralsminingLow-carbonmaterials15%13%8%7%OnshorewindNature-basedsolutions5%16Description:Accordingtoa2023survey,37percentofoilandgascompaniesfavorhydrogenasalow-carbonfueltoinvestinalongsidetheircorebusiness.ThesamesupportsharealsowenttowardCCSU(carboncapture,storage,andutilization)andsolartechnologies.ReadmoreNote(s):Worldwide;July2023;150oilandgasexecutivesSource(s):DeloitteCHAPTER

04Low-carbonportfolioLiquidbiofuelproductioncapacityoftheoilandgassectorworldwidein2022,byfueltype(in1,000barrelsofoilequivalentperday)Globaloilandgassectorcapacityforliquidbiofuelproduction2022,byfueltype3,5003,2003,0002,5002,0001,5001,000500300200EthanolandbiodieselRenewabledieselBio-jetfuel18Description:Theethanolandbiodieselproductioncapacityoftheoilandgassectorworldwideamountedtosome3.2millionbarrelsofoilequivalentperdayin2022.Thiswasthehighestproductioncapacityreportedamongdifferenttypesofliquidbiofuels,followedbythatofrenewablediesel,atabout300,000barrelsofoilequivalentperday.Theglobalproductionofliquidbiofuelsisprojectedtoreach5.6millionbarrelsperdayin2030underanet-zeroemissionsscenario.

ReadmoreNote(s):Worldwide;2022Source(s):IEARenewableenergycapacityinstalledandinthepipelineofBPfrom2020to2023(ingigawatts)BP'sinstalledandplannedrenewablescapacity2020-2023InstalledcapacityPipeline70605040302058.337.223.110.9102.71.92.21.50202020212022202319/statistics/1455879/bp-installed-and-planned-renewables-capacityBPreportedaninstalledrenewablescapacityof2.7gigawattsattheendof2023.Inaddition,theoilsupermajorhassome58.3gigawattsofrenewableenergyinthepipeline.BPhasgrownitsrenewableenergycapacityineveryyearoverthelastdecade.ReadmoreNote(s):Worldwide;2020to2023;AsofQ4ofeachyear.Source(s):BPRenewableenergycapacityinstalledandinthepipelineofShellfrom2020to2023(ingigawatts)Shell'sinstalledandplannedrenewablescapacity2020-2023InstalledcapacityPipeline*4.54.03.53.02.52.04.24.12.52.32.21.71.51.00.50.00.70.4202020212022202320Description:Shellreportedaoperationalinstalledrenewablecapacityofsome2.5gigawattsfor2023.Thatwasanincreaseof0.3gigawattscomparedtothepreviousyear.Meanwhile,itsrenewablepipelineshrankby0.1gigawattsinthesametimeperiod.

ReadmoreNote(s):Worldwide;2020to2023;Shellinterest;*Includescapacityunderconstructionand/orcommittedforsaleafterlong-termofftakeagreements(Source(s):ShellReadmoreRenewableenergycapacityinstalledandinthepipelineofTotalEnergiesfrom2020to2023(ingigawatts)TotalEnergies'sinstalledandplannedrenewablescapacity2020-2023InstalledcapacityPipeline70605040302010057.852.132.722.419.116.810.37202020212022202321Description:TotalEnergieshadaninstalledrenewablescapacityof22.4gigawattsattheendof2024.Additionally,closeto60gigawattswerecurrentlyunderconstructionorindevelopment.TotalEnergiesisamongtheoilsupermajorswiththegreatestspendingonlow-carbonsources.ReadmoreNote(s):Worldwide;2020to2023;AttheendofQ4ofeachyear.Source(s):TotalEnergiesCHAPTER

05Viewsondiversification&futuretechOpinionofoilandgasindustryexecutivesandinvestorsonideallevelofcommitmenttolow-carbonfuelsworldwideasof2023Surveyonglobaloilandgasindustrycommitmentstowardlow-carbonintegration2023Executives31%Investors45%40%35%30%25%20%15%10%5%42%41%33%26%23%0%Favorapivottowardvariouslow-carbonresourcesandsolutionsFavoroptimizinganddecarbonizingcorehydrocarbonsbusinessFavorcomplimentinghydrocarbonsbusinessthroughlow-carbonfuelsadditon23Description:Themajorityofoilandgasexecutivesfavorinvestinginlow-carbonsourcesalongsidetheircorebusiness.Accordingtoa2023survey,41percentofexecutivessupportedsuchdiversificationefforts.Bycomparison,mostoilandgasindustryinvestorsfavoredaninvestmentapproachthatwouldseeapivotawayfromtheoilandgascorebusinesstowardlow-carbonstrategies.

ReadmoreNote(s):Worldwide;July2023;150oilandgasexecutives,75institutionalinvestorsinoilandgasSource(s):DeloitteOpinionofoilandgasindustryexecutivesoninternalrateofreturnnecessaryforlow-carboninvestmentsworldwideasof2023Surveyonglobaloilandgasindustry'slow-carbonIRRexpectations2023Shareoftotalrespondents0%5%10%15%14%14%20%25%30%6-8%8-10%10-12%13%13%12-15%28%15-18%18-20%5%20-25%8%Above25%5%24Description:Themajorityofoilandgasexecutiveswouldonlyinvestinlow-carbonprojectsshouldtheyexceedanIRRof12percent.Accordingtoasurveyfrom2023,28percentofrespondentsstatedthattheminimuminternalrateofreturnwouldneedtofallbetween12and15percentforthemtoconsiderinvestinginsuchprojects.ReadmoreNote(s):Worldwide;July2023;150oilandgasexecutivesSource(s):DeloitteShareofinvestorssupportinglowerdividendstoincreasespendingonlow-carbonprojectsbyoilandgascompaniesworldwideasof2023Oil&gasinvestorsupportforlowerdividendsandhigherlow-carbonspend202345%40%40%35%30%25%20%15%10%5%20%20%0%Stronglysupport,wouldincreaseweightageofoil&

Somewhatsupport,wouldminimallyincreasingNeutral,nochangeinweightagegascompaniesinportfolioweightageofoil&gascompanies25/statistics/1455338/oil-and-gas-investor-support-for-low-carbon-spendThemajorityofoilandgasinvestorswouldsupportlowerdividendsifitmeantcompaniesincreasedtheirlow-carbonspending.Accordingtoa2023survey,60percentofinvestorswereinfavorofsuchactions,ofwhich20percentshowedstrongsupport.ReadmoreNote(s):Worldwide;July2023;75institutionaloilandgasinvestorsSource(s):DeloitteOpinionofoilandgasindustryexecutivesonpotentialhindrancestocompanies'energytransitionworldwideasof2023Surveyonglobaloilandgasindustry'spotentialbarrierstoenergytransition2023Shareoftotalrespondents0%2%4%6%8%10%12%14%16%18%20%19%19%18%Slowdecision-making/implementationOverlookingcostandpricecompetitivenessoflow-carbonfuelsOverdependenceonregulatorysupportMissingtechnologyshifts12%12%IncompleteemissionlifecycleassessmentoffuelsInsufficientconsiderationfornationalinterest7%7%Shunninghydrocarbonscompletelybeforesufficientlyintegratinglow-emissionfuelsSub-optimallyengagingfinanciers6%26Description:Accordingtoa2023survey,18percentofoilandgasindustryexecutivessawoverdependenceonregulatorysupportaspotentialharmtotheirenergytransition.Slowdecision-makingandunknowncostandpricecompetitivefactorswereseenasothermajorconcernsbytheindustry.ReadmoreNote(s):Worldwide;July2023;150oilandgasexecutivesSource(s):DeloitteLookingfiveyearsahead,whatimpactdoyouexpecttheenergytransitiontohaveonthepriceofoil?SurveyonenergytransitionimpactoncrudeoilpricesintheU.S.202335%30%25%20%15%10%33.