‘Treated like tobacco’: Fredriksen executive says banks and investors missing chance to shape energy transition

Oil and gas is being treated like the tobacco industry by a cluster of banks and investors, according to a leading executive at John Fredriksen’s private investment vehicle.

Norwegian billionaire John Fredriksen Photo: NTB/SCANPIX

This hardline approach is preventing industry stakeholders from influencing the energy transition, according to Jan Erik Klepsland, investment director at Seatankers Management.

Klepsland told the Marine Money Ship & Offshore Finance Forum in Oslo on Thursday that some stakeholders were adopting a black-and-white approach to fossil-fuel related investments.

“Many of those guys think about shipping, oil and gas and offshore as tobacco and just say no,” he said.

“Tobacco, you have a choice, you don’t have to smoke. Unfortunately, we don’t have any choice today than transporting good around the world with ships. That is the most efficient way of transporting goods.

“And we also need oil, unfortunately. Everyone has a raincoat and everybody uses oil, it’s just part of life, as of now.”

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Klepsland explained that the Fredriksen group, whose investments include Northern Drilling and crude tanker giant Frontline, believed in a gradual energy transition as you “can’t go green overnight”.

He said the just say no to oil and gas investors were largely in Europe, questioning if industry in the continent could to take leadership in the energy transition.

“Unfortunately, some banks and investors in the Western world tend to be black and white and that is not good,” he said.

“If one of the Nordic banks comes to us and says we will give you a loan so long as you check these boxes and do something transitional, that’s the way you can influence it,” Klepsland added.

The executive’s comments come just a few weeks after BNP Paribas withdrew funding for new oil and gas projects, including FPSOs, removing a major lender for the world’s oil majors.

Singapore bank Oversea-Chinese Banking Corporation (OCBC) followed suit, pulling the plug on upstream oil and gas project financing, creating funding concerns in the Asia Pacific market also.

Klepsland argued the offshore industry faced a “paradox where banks and other investors are happy financing Shell, but they are very uncomfortable what happens between the platform and the shore”.

“I think Shell needs to drive it and say our PSVs [platform supply vessels] are going to be green going backwards and forwards to the platform. That is going to drive it not the guys owning the PSVs,” he said.