Equinor’s stock downgraded due in part to continued consideration of Bay du Nord

Media Release about Equinor’s Bay du Nord: For Immediate Release March 5, 2024.

Youth protest against Bay du Nord in St. John’s, NL, and for a different path forward than oil and gas.

Sierra Club Canada was concerned to hear of recent plans by Equinor to attempt to reshape their Bay du Nord project, which was put on hold for up to three years in 2023 due – the company said – to increased costs. Equinor’s decision to attempt to reshape the project sets misleading expectations for the future of the oil and gas economy of Newfoundland and Labrador which Sierra Club Canada says is a sector destined to decline sooner rather than later making oil and gas projects like Bay du Nord unviable.

Sierra Club Canada believes it important that the media and public in Newfoundland and Labrador and Canada as a whole be made aware that the conversation around the economic feasibility of Bay du Nord internationally and in Norway is far less optimistic than has been presented in recent communications from Equinor locally.

Indeed, despite high profits from other aspects of the company, Equinor’s stock was recently downgraded in part due to its continued pursuit of risky future investments, including Bay du Nord, as reported in Dagens Næringsliv (1, a Norwegian newspaper). 

As quoted about Bay du Nord in the paper:

““The brokerage house [ABG Sundal Collier, a Nordic investment bank known to follow the company closely and listed as an analyst by Equinor (2)] wrote that Equinor is investing in offshore wind power where the internal interest rate is low or negative, at the same time that the company is considering taking up again the risky Bay-du-Nord project.”

“We fear Equinor will also become an aggressive bidder in the upcoming wind auctions in Norway – risky projects where the profitability is probably low,” wrote the brokerage house, which is also worried about news from Upstream that Equinor has again started looking at the giant oil project Bay du Nord offshore Canada – less than a year since the project was stopped due to high costs and high risk.”

ABG Sundal Collier’s downgrading of the Equinor stock shocked the market, as it represented a 30 percent decrease in the expected price of the Equinor share. A week later, the pessimism proved to be valid, as Equinor’s share had its worst day in almost four years after the release of its financial report for 2023.

Media can read the Dagens Næringsliv article here: https://www.dn.no/borskommentar/deler-ut-et-helt-telenor-men-noen-vil-ha-mye-mer/2-1-1595041

Sierra Club Canada has called on Equinor to stop attempting to sell the economically risky Bay du Nord project as a solution to employment and economic wellbeing in the province of NL. The organization says that while the need for an economic shift away from oil and gas is a significant undertaking it is achievable, but says such a shift is hindered when unrealistic expectations are set about the future of oil and gas.

“People must be given the chance to adjust their plans, both as a province, and individually in terms of what education and retraining they pursue. It is vital that the provincial government invest significantly now to support efforts such as retraining for those in the oil and gas industry,” says Kassandra Drodge, a community organizer with Sierra Club Canada

“It is also vitally important that any public funds be spent on building up and supporting alternative industries to oil and gas rather than on attempting to prop up a sector going into inevitable decline. There is so much tied up in subsidies to the oil and gas sector already and we have the potential and money to really invest in renewable industries that will generate better job prospects for this province as oil and gas ventures become increasingly less profitable and more constrained.”

Recently, the province’s auditor general once again called on the provincial government ‘to determine how much it will cost taxpayers when the companies operating the province’s offshore oilfields decide to pull up their pipelines and leave’ (3). 

Sierra Club Canada adds that Bay du Nord is not a viable way forward for the future of NL’s economy and it would pose a significant risk to local fisheries if built. This is not to mention the impact 1.3 billion barrels of oil would have on global climate change which is fueling wildfires and extreme storms in Canada as well as threatening to collapse Atlantic Canadian marine ecosystems upon which fisheries depend.

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Sources:

(1) https://www.dn.no/borskommentar/deler-ut-et-helt-telenor-men-noen-vil-ha-mye-mer/2-1-1595041
(2) https://www.equinor.com/investors/equinor-analyst-coverage
(3) https://halifax.citynews.ca/2024/03/02/newfoundland-and-labrador-asked-to-figure-out-cost-of-shutting-down-oil-projects-2/ 

For more information and interviews contact Media@sierraclub.ca

More on Bay du Nord also available on our website.