Chevron scaling back on renewables for oil and gas investments
Darajat Unit I owned by Indonesia Power (a PLN subsidiary) with steam supplied by Chevron (source: wienblog-growingtree/ blogspot)
Alexander Richter
3 Haz 2014
In a recent article, Chevron is selling part of their asses in renewable energy in favor of traditional fossil fuels. The rationale behind the decision seems to be the low profitability of current green energy.
As stated in a news article in Bloomberg, Chevron is reducing its interest in renewable energies and favouring its core business which is oil and gas.
Quoting directly from the article, Chevron is “pursuing technologies that leverage our strengths and can be deployed with competitive economic returns,” according to a company spokesman in a written statement. “These include geothermal energy, solar, and energy-efficiency technologies.” A pullback from renewables doesn’t surprise some analysts, who say returns of even 20 percent can be bested by oil and gas projects that can generate profits of 25 percent to 35 percent. “Renewables for oil companies are sort of like the coffee shop inside Bloomingdale’s,” says Oppenheimer analyst Fadel Gheit. “On their list of priorities, it will always be at the bottom.”
The rationale for this change of heart seems to be rooted in the differential in the core strengths of the company, being much better at traditional oil and gas than at renewables. “When you have a very successful and profitable core oil and gas business, it can be quite difficult to justify investing in renewables,” says Robert Redlinger in the article.
Source: Bloomberg BusinessWeek Website
