"The fallout from the Covid-19 pandemic will accelerate the pace of the transition to a lower-carbon economy." The words of Bernard Looney, chief executive of oil company Bp, are borne out by the figures for the second quarter released by the London-based multinational. Bp is one of the seven largest oil companies in the world and recorded a net loss of 16.8 billion dollars as a result of the coronavirus. It has therefore decided to cut its dividend to 5.25 cents per share — that is, to reduce payments to shareholders. It is the first time in ten years.

How oil companies are reckoning with Covid-19

Covid-19 has created "an unstable and challenging commercial environment," the oil company said in a press release. "The outlook for commodity prices and product demand remains difficult and uncertain," it continued. As early as June, Bp — which until 2001 was British Petroleum, but today prefers the slogan Beyond Petroleum — was forecasting "a lasting impact of the pandemic on the global economy, with the possibility of weaker energy demand over a prolonged period."

Fossil fuels? "Keep it in the ground"

This factor, combined with the fall in the oil price experienced when the world was at a standstill and barrels were piling up in storage sites, appears to have given a push to the energy transition. Some of the oil companies' greatest fears — the loss of value of exploration licences as well as of fields and infrastructure already in production — are beginning to materialise.

The "affordability" of fossil fuels is therefore fading, while that of the more established renewable resources is becoming ever more tangible, with solar photovoltaic leading the way. Back in 2015, economist Spencer Dale, now at Bp, had predicted in a paper published on the company's website that we would not stop drawing on global oil reserves as a response to the climate crisis.

Five years on, that prediction appears to have been confirmed, aided by the global health emergency and a shift in mindset that is leading younger generations to change their cultural approach — favouring the sharing and reuse of resources over their ownership, and respect and awareness towards the planet in place of indifference.

Bp is not an isolated case. Other companies among the world's largest are also grappling with the health emergency.

Stranded assets appear in Total's balance sheet

For the first time in history, an energy company has cited stranded assets in its own balance sheet. This is a term that refers to active but unusable resources — that is, fossil fuel reserves that are not considered environmentally sustainable and risk generating economic losses for companies. The company in question is the French firm Total, which in the second quarter of 2020 recorded write-downs of 5.1 billion dollars. The unusable resources in question are Canada's oil sands, which are highly costly and polluting, and risk being left unused. This is particularly significant given that by 2050 the energy major has pledged to transform itself and reach net-zero CO2 emissions.

Shell's collapse and Eni's pivot in the face of the coronavirus

Shell and Eni are also reckoning with the coronavirus. For the Anglo-Dutch company the collapse is resounding: between April and June 2020 the net loss stood at 18.1 billion dollars.

The Italian major lost 7.34 billion euros in the first six months of the year, compounded by production cuts set by the Organisation of the Petroleum Exporting Countries (Opec) and weaker gas demand, primarily from Egypt.

To cushion the fall, Eni has revised its dividend policy, setting for the whole of 2020 a fixed component of 36 euro cents per share pegged to a barrel cost of 45 dollars, and a variable component proportional to any price increase up to 60 dollars. In addition, it will cut investment and costs: 5 billion euros in 2020 and 3.8 billion the following year.

Resources earmarked for green projects, including biorefineries, remain untouched: between 2021 and 2025 they will account for 17 per cent of the total, up from the 12 per cent previously planned. The company has allocated 1.8 billion euros to its decarbonisation project, to be distributed, among other things, between reducing the greenhouse gas emissions from all its activities and building a low-carbon portfolio. The hope is that the promises made by oil companies — beyond the measures taken to deal with Covid-19 — will translate into action and banish the spectre of greenwashing.