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| - Already under pressure due to climate change, the world's top listed oil firms suffered historic losses in 2020 as the Covid-19 pandemic sent demand and prices tumbling. The oil majors -- BP, Chevron, ExxonMobil, Shell and Total -- suffered $77 billion in losses for the year. Shell CEO Ben van Beurden called 2020 an extraordinary year. Total's Patrick Pouyanne said: "All of us will remember 2020 as a landmark year that brought unexpected challenges and led to significant changes." While much of the losses were accounting charges to record the drop in the value of their assets, the drop crude oil prices -- which briefly turned negative in 2020 for the first time ever -- caused real pain. The spread of the coronavirus and the lockdowns meant to slow it caused massive slowdowns in economic activity, with international air travel coming to a near standstill. This dampened demand and as oil producing nations didn't immediately cut production, crude prices plummeted. The crisis called further into question the financial model of the oil majors, which already face a longer-term threat from a shift away from fossil fuels to combat climate change. S&P Global Ratings said last month that it "believes the energy transition, price volatility, and weaker profitability are increasing risks for oil and gas producers." It placed the shares of Chevron, ExxonMobil, Shell, Total as well as the Chinese oil company CNOOC on watch for a ratings downgrade. The oil majors "are skating on ever-thinning ice as the effects of climate change combine with other events like the Covid-19 pandemic" said Professor David Elmes at the Warwick Business School. "The pressure to diversify is rising," he added. European oil majors have recognised this and have begun to diversify their operations including investing in renewable energy despite their efforts cut costs. Total even plans to change its name to TotalEnergies to better reflect its involvement in various energy sources. The move follows Norway's Statoil rebranding itself Equinor. Renewable energies offer more stable revenue than oil and gas, which are volatile. That stability is not the only thing attracting the oil majors. "The reasons for diversifying today are to be found with the climate change policies and pressure from investors, shareholders and even clients who are pushing the oil firms to decarbonise," said Francois Leveque, a professor at Mines-ParisTech. US oil majors have generally resisted moving into renewables. And while ExxonMobil has moved to create a "low carbon" unit, it will focus mostly on carbon capture projects that would reduce the emissions of its facilities. "They are driven by shorter-term profits and US markets don't much like companies which diversify," said Leveque. At the worst of the crisis the two US oil majors considered another solution according to the Wall Street Journal -- a merger that would have created a massive oil firm. jmi/rl/har
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