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Europe’s Energy Crisis: Why PE firms are Renewing Investments into Fossil Fuels

As oil and gas prices have soared over the past year, so have investments in the industry, and they continue to rise. In part, this renewed investment in the sector has been caused by Russia’s invasion of Ukraine, causing an energy crisis in Europe. Investment in certain fossil fuels is being viewed as a steppingstone to greener energy sources. Essentially, renewables cannot be rolled out fast enough and at a big enough scale to make oil and gas obsolete just yet.

This revived investment into the sector bucks the recent trend of investors pulling money from fossil fuel investments amid its fast-crumbling reputation. Investors have become wary of the industry due to net zero commitments, ESG investment trends and questions over the long-term profitability of these commodities.

Despite this, Private Equity companies are trying to convince investors there is still reason to invest into oil and gas, stating their importance in the transition to renewables. For example, despite their commitment to achieving net zero across its portfolio by 2050, Vanguard has doubled down on investments in fossil fuel projects because of its fiduciary responsibility to maximise investment returns.

All in all, as supply for fuel constricts, fossil fuels will remain a necessity until alternative energy sources are sufficient to meet demand.

Overall, opportunities in the European oil and gas industry have clearly become more attractive for private equity sponsors.


private equity, fossil fuels, renewables, energy, investment, oil, gas, energy crisis, private markets

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