Having already diversified significantly internationally within its upstream portfolio, Equinor is now leveraging its offshore expertise to develop wind assets. Credit: Courtesy of Equinor

National Oil Companies (NOCs) are diversifying beyond their upstream oil and gas origins more than ever. The scale and direction of such diversification vary significantly depending on the profile of the NOC and the needs of its parent country. The energy transition is changing, pushing more and more NOCs to expand their operations beyond exploration and production, and even beyond oil and gas altogether.

NOCs have also increasingly looked further down the oil and gas value chain for diversification opportunities. Many NOCs, particularly those catering to high domestic demand, have always had significant refining operations. However, companies are also looking to invest in the growing petrochemicals market, where demand for high value hydrocarbon-derived products is expected to remain strong even as economies turn to new sources of energy other than oil and gas.

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Levels of international and vertical diversification for selected NOCs

Source: Upstream Analytics, GlobalData Oil and Gas                                                                                                                            © GlobalData

The diversification trend also extends to the NOCs with the largest domestic resources. Rosneft, Saudi Arabian Oil Co (Saudi Aramco), and Kuwait Petroleum Corp are forecast to have the highest petrochemicals capital expenditure in among NOCs, with all planning to invest both domestically and internationally.

Fulfilment of an energy supply mandate through the energy transition for many NOCs also means diversification beyond oil and gas. A number of companies have begun to invest in renewables such as wind and solar. Domestically, the rationale behind such investments can be the need to provide energy to the population, and often in remote locations, with the added benefit that it can free up oil and gas production for supply to higher value markets. Norway’s Equinor is looking to be a leader in this transition, with significant growth plans. Having already diversified significantly internationally within its upstream portfolio, it is now leveraging its offshore expertise to develop wind assets and currently has 292MW of wind generation capacity.

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