Investors Not Convinced by Euro Majors' Strategies

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Investors appreciate European oil companies' efforts to transition to greener business models but are not quite convinced massive investment in renewable power alone is the best thing to do. Companies actually seem to agree and most are targeting diversification in businesses including renewable electricity but also biofuels, hydrogen, electric mobility and carbon capture, where they might have stronger competitive advantages, according to Martijn Rats, investment bank Morgan Stanley's chief commodities strategist. This could prove especially appealing if company boundaries were redrawn and some components partly spun off to attract different categories of investors. This would be in line with activist hedge fund Third Point's recent proposal to split Royal Dutch Shell into legacy petroleum and lower-carbon businesses, including electricity and natural gas.

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