EMEA oil majors will still generate 75%-85% of their EBITDA in 2035 from traditional hydrocarbon businesses, according to Fitch Ratings’ estimates, even though they are implementing comprehensive transition plans that will gradually boost the share of low-carbon activities.

A recently published scenario analysis uses Fitch assumptions and publicly announced guidance from issuers and aims to illustrate a view of what EMEA majors’ cash flow profiles and credit metrics may look like in 2030 and 2035 under their transition plans.

We expect the ramp-up of low-carbon businesses to be back-loaded, with EBITDA contribution only becoming material in 2027-2030. The ultimate impact of low-carbon investments on operating cash flow and credit metrics is likely to be limited and largely similar across the peer group by 2030. All four companies could generate 10%-15% of their 2030 EBITDA from sustainable businesses, with Eni and BP having a higher contribution from low-carbon sources. This gap becomes more apparent by 2035, when BP and Eni could derive about a quarter of EBITDA from low-carbon verticals, while for Shell and TotalEnergies this is still slightly below 20%.

BP has the most ambitious energy transition strategy in the peer group, which is likely to lead to the largest contribution from low-carbon businesses to EBITDA by 2035. Eni’s rapid buildout of its low-carbon business relative to its traditional activities reflects the smaller scale of its upstream and traditional downstream asset base, and lower profitability under our mid-cycle price assumptions.

Fitch expects the four companies to maintain low EBITDA net leverage during the illustrative period, at least in line with current rating sensitivities, and in some cases below positive sensitivities. We may reassess the rating sensitivities in future as the companies implement their energy transition plans to reflect our views on debt capacity of non-hydrocarbon businesses.
Source: Fitch Ratings