Consumer needs and preferences in the energy industry are evolving. Environmental, social and governance (ESG) concerns are becoming more acute—inspiring action and shifting value towards low-carbon solutions. These trends accelerated in 2020 and for the first time, market capitalization of leading low-carbon solutions companies began to overtake those of oil and gas (O&G) majors. This is despite the majors laying out energy transition strategies, setting low carbon energy targets and generating higher revenues by an order of magnitude.1 

In response to this radically changing landscape, energy companies are charting divergent courses for their futures. Some continue to bet on their ability to generate returns from the O&G value chain. They are focusing on growing margins and lowering carbon intensity. Others are supplementing their capabilities with low-carbon energy solutions or exiting hydrocarbons altogether. This blog focuses on the path forward for the energy majors in Europe who are betting big on diversification.

The European energy majors

There hasn’t been such a profound shake-up of this peer set in nearly 100 years. While they renew their identities and operating models, they’re also rethinking asset portfolios and what it takes to win. The strategic direction of each is a variation on a theme: new energy investments ramp up as hydrocarbon businesses scale down. New investments are wide-ranging. All players are spreading their bets across multiple asset classes and technologies with wind and solar being common to all (see table below).


Source: IHS Markit; Accenture analysis

To reach their low-carbon targets, energy majors are leveraging acquisitions and alliances. These are enabling them to build knowledge, capabilities and presence at pace in new energy markets. This type of strategic pivot has been executed successfully in Europe before, albeit at a smaller scale and at a time when these were uncharted waters. Ørsted, formerly DONG Energy, went through a similar transition over the past decade. In 2008, the company was one of the most coal-intensive energy companies in Europe. Today, Ørsted is one of the world’s most sustainable energy companies and a global leader in the transition to green energy. Its transition was not easy. For example, its first industry-scale windfarm in Denmark was not a commercial success. But that setback didn’t deter Ørsted from its vision. According to Marianne Wiinholt, Ørsted’s CFO, “It has been a difficult transformation, but if you get the right momentum, you can do much more than what you could imagine.” 2

Those are valuable words of advice for energy majors that have announced transition strategies and made early investments but have yet to see their valuations climb. Players embarking on this journey later will likely pay more for their low-carbon assets and, therefore, enjoy a lower potential upside.

The three value levers for portfolio restructuring

As energy majors restructure their portfolios, they will need to apply rigorous checks and balances to all deals. This includes robust due diligence and risk/return evaluation processes. Deal valuations should also be considered carefully given the danger of overpaying as majors look to buy low-carbon assets “at any cost,” which may risk return on investment.

To successfully transition from an oil major to an energy major, industry leaders also need a fresh approach to extract the full value of their divestments, investments and current portfolios. Based on our experience, three key levers make the difference.

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1. Integration

How can we integrate across both physical value chains and customers?

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Given midstream, storage and transmission infrastructure limitations, the location of renewable generation is highly consequential. Industry leaders should consider several factors when assessing opportunities alongside existing footprints and look for ways to create value that others cannot. These include the abundance of renewable energy sources, access to emerging technologies, the regulatory landscape and investment incentives, ability to repurpose existing infrastructure and the potential synergies with fossil fuels assets to, for example, reduce Scope 2 emissions.

Customer integration is equally challenging. While the O&G sector is not known for customer centricity today, changes in supply and demand dynamics require companies to put customers at the center of future business models. This means shifting from energy as a commodity to energy as a service, leveraging data and digital tools to inform and assist customers on their energy consumption, working with adjacent industries that are increasing energy demand and working with governments to tackle climate change and meet national emissions targets.

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2. Scaling

How can we replicate a winning formula across the portfolio?

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Scalability refers to not only increasing the size of the acquired business through post-merger integration, but also leveraging acquired capabilities and technologies to generate even more value. There are several ways O&G companies can activate the scalability lever. They can, for example, design an operating model that integrates new businesses so that they become growth engines with replicated capabilities. They can develop a clear growth strategy for the new business so that it takes advantage of the scale of the energy major and broadens its market reach. And they can create synergies between the businesses to develop a unique go-to-market strategy and platform (e.g. leverage refining expertise for the production of synthetic fuels).

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3. Optimization

How can we adapt to take advantage of changing economic conditions?

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O&G companies need to optimize on two fronts. Firstly, capital allocation needs to be directly linked to the energy transition strategy, reflecting the importance of low carbon proof points to build early momentum and long-term growth potential. Allocation also needs to be faster and more dynamic for these companies to seize low carbon opportunities given lease auctions often conclude in days, not months. Many players are accordingly developing new capital management frameworks and bringing greater transparency to communications to help manage market expectations.

Equally important is a focus on commercial optimization. Trading capabilities that keep production contracts and delivery commitments aligned and identify margin-accretive opportunities could be ever more critical to sustaining profits across diversified portfolios. To optimize commercial capabilities, O&G companies will likely need to expand their market offerings and become more flexible to adjust to fluctuating demand. They will possibly need to identify new market opportunities and alliances and also develop differentiated offers beyond crude and feedstocks. They may need to manage the crude and electricity market volatility risk of individual businesses. And given the imperative to reduce Scope 1, 2 and 3 emissions, they need to always consider carbon emissions when making investment and divestment decisions.

Competitive advantage in a new era of growth

Energy majors can also draw on their long-standing relationships with governments around the world, expertise in delivering complex capital projects and experience in large-scale integration. By combining these strengths with a dynamic and deliberate approach to evolving their asset portfolios, European energy majors can play a decisive role in shaping the future of low-carbon energy. 

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Disclaimer: The views and opinions expressed in this document are meant to stimulate thought and discussion. As each business has unique requirements and objectives, these ideas should not be viewed as professional advice with respect to the business. This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks. No sponsorship, endorsement, or approval of this content by the owners of such trademarks is intended, expressed or implied.

1 Accenture analysis.
2 “Could our green transformation inspire yours?,” Ørsted,

Andrew Smart

Senior Managing Director – Strategy & Consulting, Energy Lead, Europe

Will Bowen

Senior Manager – Strategy & Consulting, Mergers & Acquisitions

Robbi Davies

Managing Director – Strategy & Consulting, Energy

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