The original “Seven Sisters” oil companies that we knew in the 1970/80s have continued to change their corporate positioning to reflect shifting times and evolving markets which include severe oil price volatility, mergers and acquisitions, emergence of mega oil traders, national oil companies’ dominance, and lately the energy transition.
The original “seven” are today represented by US multinationals ExxonMobil and Chevron, and the Europe based Shell, BP, Total and ENI, and all of them are at varying stages of corporate re-engineering to transition from high carbon fuels (oil and gas) to renewable energy.
Recently the French company Total announced a corporate rebrand to TotalEnergies with a new business model that expands its energy market participation beyond oil and gas to include renewable energy — wind, solar, green hydrogen, among others.
The name change is perhaps the most visible and proactive indication by any oil company so far that use of oil and gas will decrease as the world embraces use of low carbon renewable energy.
It is an expression of commitment and obligations by TotalEnergies to work towards meeting its carbon emissions reduction milestones to address climate change.
This will invariably see the multinational increase its capital spending in solar and wind energy generation, energy storage technologies, while supporting green electrification of transportation which includes electric vehicles charging infrastructure.
The company will be expected to gradually scale down investments in new oil production ventures in line with its long-term energy mix plans to meet its carbon footprint targets.
It is interesting to note that the European multinationals are more prepared and committed to energy transition than the US counterparts mainly due to consistent climate change policies and strategies by European governments.
The US companies lost four years during the Trump administration which was non-supportive of climate initiatives. President Biden green policies, coupled with increased investor, financiers and activist pressure are already prompting the US oil companies to re-align their future business models to accommodate renewable energy.
TotalEnergies is the only remaining multinational corporate in Kenya and in the region (Shell exists as a licensed brand franchise to Vivo) participating in downstream, midstream, and upstream segments of the oil and gas industry.
The company is a significant participant in Uganda oil development projects including the pipeline through Tanzania, and Mozambique natural gas development. It is also a minority shareholder in the Turkana oil development project.
This puts TotalEnergies in a strong position to work jointly with regional governments to advance a carbon strategy that balances carbon footprint gains in green energy — wind, solar, geothermal, hydro, natural gas — with upstream oil development carbon footprints, so as to justify much needed investments to commercialise oil deposits in the region.
After all, oil will in the foreseeable future remain in demand in particular applications which include chemicals.
Climate change and energy transition journeys will be walked by many at varying speeds. There will be resistance by those with vested interests in oil supply chains who include investors, traders, and oil producing countries whose economies are heavily dependent on oil exports.
Oil producing countries will be pushing to pump as much oil into markets to benefit from oil demands as long as these last. Countries wholly dependent on oil imports will however be more flexible in their uptake of green energy alternatives.
For Kenya, energy transition is an open cheque of opportunities to be filled with least cost options which provide wider economic benefits while guaranteeing energy security and efficiency.
There will need to be an energy transition policy and strategy specifically tailored to optimise options to benefit Kenya while meeting its “net” climate obligations. All this with a caveat that we do have high carbon fossil fuels (coal and oil) still buried in Kitui and Turkana County, and these have economic values.
As for TotalEnergies the rebranded company is welcome and encouraged to fully play its role in energy transition in the region.
The company chose to remain in Africa when all the other multinationals opted to abandon the continent when the markets became tough. The company also had faith in our economy when they floated some of their shares in the NSE.