Oil and gas bankers confront their own energy transition By Reuters

2/2

© Reuters. FILE PHOTO: A street sign on Wall Street outside the New York Stock Exchange September 18, 2007. REUTERS/Brendan McDermid

2/2

By Isla Binnie and David French

(Reuters) – Can oil bankers learn renewable tricks?

They may need to in this climate, judging by the experience of Douglas MacKenzie, a Citigroup (NYSE:) banker who has spent decades advising global energy giants on fossil fuel deals since joining Goldman Sachs as an associate in 1985.

“I cover Big Oil. I’m a supermajor guy,” the 63-year-old said. “Now all of my clients are focused on the transition.”

He decided he had to get up to speed with greener energy sources in 2018 and is now EMEA chairman of Citi’s new Natural Resources and Clean Energy Transition team, which was launched last March, part of a wider pivot by investment banking towards helping energy clients move away from fossil fuels.

Oil and gas dealmakers, once the darlings of banking, must plot their own transitions to lower-carbon careers.

Many are being retrained and repurposed as major banks including Citi, Credit Suisse (SIX:) and Societe Generale (OTC:) merge them into bigger teams that include clean power and sustainability specialists.

“I spend 12 hours a day reading,” said MacKenzie, whose past deals include BP (NYSE:) Plc’s $48.2 billion merger with Amoco in 1999.

“As an oil and gas banker I would stay current with geopolitics, get up in the morning and click the BBC website to make sure hostilities hadn’t broken out somewhere. But now I’m trying to follow the technology.”

There is still a lot of money to be made in oil and gas, with bankers striking about $290 billion in deals globally in 2021, roughly 10 times the level transacted for renewables, according to Refinitiv data.

A changing of the guard is underway though, with the volume of renewables M&A in 2021 growing more than 11-fold versus five years ago, while the annual number of oil and gas deals is down by a quarter over the same period.

“If you’re a renewables banker you are going to be busy for the next 30-plus years,” said Ralph Ibendahl, head of a new Energy Transition group at RBC Capital Markets in Europe.

“When you are in traditional oil and gas that field is inevitably going to narrow over time with the move to net zero.”

Yet some bankers face dilemmas over when to take the plunge, and risk being left behind in an evolving low-carbon finance arena.

Jason Moore, founder of London-based recruiting firm Harrington Moore, said some seasoned bankers were moving to niche oil and gas boutiques. Many people are racing to learn about new green technologies, though, before the competition becomes too intense, he added. 

“The pivot is not too difficult right now,” he said. “They probably have another 12 to 18-month window. The skill set is there already, they know how to structure deals.”

BANKS’ BUMPER DEALS

Most investment banks have kept their fingers firmly in both pies.

Citi topped the global rankings for the value of…