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ESG Industry Report Card On Oil And Gas

In fourth place is the ESG Industry Report card that expands on the S&P Global Ratings' Risk Atlas sector analysis by focusing on the credit-specific impacts, which in turn forms the basis for analyzing the exposures and opportunities of individual companies in the oil and gas sector.

Some key takeaways from the report include:

• As fossil fuel producers, oil and gas companies are among the most exposed to the energy transition. Oil and gas prices and refining margins are extremely sensitive to medium- and long-term demand expectations.
• Current long-term industry projections still show fossil-based fuels account for the lion's share of global primary energy demand, supported by its vital role in the global economy and mobility. That said, the speed of the transition away from carbon-based fuels is uncertain but is beginning to accelerate. Disruptive external factors such as government environmental policies and regulations on greenhouse gases, and long-term product substitution risks (e.g. vehicle electrification) could weigh on credit quality.
• Pollution is another environmental risk factor, including risks related to the use of chemicals (especially in fracking), as well as high-impact, low probability events such as severe oil spills and refinery accidents. Subsectors with higher exposures to such risks are oil sands, shale, and offshore.

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This material is also available on our public website, spratings.com/ratings