Equinor will not prioritise hydrocarbon projects over renewables despite higher expected returns for future oil and gas projects amid a tightening market, chief executive Anders Opedal said.

The Norwegian oil major demands returns of 10% on oil and gas projects when the oil price averages just $30 per barrel — much lower than the $65 per barrel average in the company's current projections — while future wind energy projects are expected to generate returns of 5% to 6%.

“Our investments in renewable [energy] will increase substantially over time, and the balance between oil and gas and renewables will even out more. This will happen independently of the oil price, as we need more robust projects even if we see short spikes in the oil price,” Opedal told Recharge's sister publication Upstream during a digital press meeting.

“We are building up a portfolio that enables us to capture the growth in oil demand while we are building robustness in the portfolio,” he said, adding that a large share of renewables will “enable the company to maintain cash flow when oil and gas [demand] starts going down”.

Offshore wind

Opedal declined to tell whether Equinor had participated in the UK round 4 offshore wind leasing auction this week, at which oil sector rivals BP and Total, as well as German utility RWE were among the winners.

The CEO added Equinor sees growing opportunities in international markets other than the UK.

“We see new competitors coming in and increasing competition, but we remain confident that we can be competitive in the areas where we select to compete,” he said.

That includes technology, the chief executive said, citing floating offshore wind power as an example.

The company last month had completed a partnership with BP in two major US offshore wind projects with a combined capacity of 4.4GW, and was successful in the almost 2.5GW second offshore wind solicitation in the US state of New York.

Equinor had previously set ambitions for profitable growth within renewables and expected to reach installed capacity of 4 gigawatts to 6GW by 2026 and 12GW to 16GW by 2035.