Majors’ divestment dilemma

Depressed oil prices are forcing large-cap producers to roll back spending. But will they continue to try to shed non-core assets?

The equity markets had long been in a mood to reward large-cap international oil companies (IOCs) that pledged a very similar diet of capital disciple. Targeted spending in only the projects offering the best returns, lowered costs and cash returned to shareholders were firmly in favour.  And high-grading the portfolio by divesting non-core or high-cost assets was a de rigeur part of the story. But no one expected or planned for an oil price of below $30/bl. Millions of extra barrels of oil have flooded the market in the past few weeks following the collapsed Opec+ talks. And the crisis is being aggravated by the Covid-19 pandemic, which has removed global energy demand on an unprecedented s