In January 2021, a group of European oil majors—Shell, Eni, and Total—sold off their drilling rights in the Umuechem oilfield in Nigeria to a local private equity-backed company called Trans-Niger Oil & Gas (TNOG). From the majors’ perspective, the sale was a climate change win: one more polluting asset off the books in the companies’ shared commitment to reach net-zero greenhouse gas emissions by mid-century.
But the emissions from those oil wells didn’t vanish. Instead, they increased dramatically under the management of TNOG, which has no climate targets and isn’t answerable to shareholders or the public. Immediately following the sale, average flaring of excess gas at the site—a potent source of emissions—spiked nearly nine-fold.
Different versions of this story have played out hundreds of times globally over the past five years, according to a May 10 analysis by the Environmental Defense Fund of 3,000 oil and gas asset transfers between 2017 and 2021. Most of those deals were between two companies that both lacked environmental commitments. But in 15% of them, assets moved from a company with environmental commitments to one without. And in 30% of deals, assets moved from a public company to a private one—effectively shifting emissions into the dark, rather than eliminating them.
As oil and gas companies come under pressure to cut emissions, offload risky investments, and return money to investors, many are undertaking a firesale of high-carbon assets. The number and value of asset sales are both on the rise, reaching 498 and $198 billion, respectively, in 2021, according to EDF. The share of those deals that move assets from companies with climate targets to those without is also increasing.
When such sales come without climate strings attached, they leave net emissions higher than they were before, tinting the sale with an opaque shade of greenwashing. It’s up to sellers, and the financial institutions that support these sales, to write specific climate-related conditions into sales contracts, says Andrew Baxter, the study’s lead author.
“Regardless of the sellers’ intent, the result is that millions of tons of emissions effectively disappear from the public eye, likely forever,” he says. “And as these wells and other assets age under diminished oversight, the environmental challenges only get worse.”