The Wood Group has responded to reporting critical of expansion in its oil and gas divisions, following a £430m, UK Government-backed Green Transition Loan.
The Aberdeen-headquartered engineering group grew its upstream oil and gas business by 17%, so that it accounted for more than $3bn in revenue during 2022, up from $2.6bn in 2021, according to analysis by the Guardian and the investigative journalism organisation Point Source.
The article claimed that during the same period, Wood reduced the size of its renewable, hydrogen and carbon capture business units by 35%, so that they only accounted for revenues of $222.8m in 2022, down from $344.6m in 2021.
The five-year loan, which was designed to help the business transition away from fossil fuels, was announced in August 2021 by then international trade secretary Liz Truss.
It was guaranteed by UK Export Finance (UKEF), which stated at the time that Wood had committed to “increasing its clean growth portfolio and significantly reducing its greenhouse gas emissions over the five-year tenure of the facility”.
Following the award the loan, Wood announced at least 20 major contract awards for work on oil, gas and petrochemical infrastructure, including a multi-million dollar deal with Saudi Aramco to deliver engineering and project management services for Saudi Arabia’s Safaniyah and Manifa oilfields in December 2021.
In addition, Wood also won a three-year contract with Shell to extend the production life of oil and gas facilities in the North Sea, alongside deals with Chevron, BP and Equinor.
Also, less than a year after receiving the loan, Wood sold its environmental consulting unit to WSP Global for $1.8bn.
Robin Wells, a spokesperson from Fossil Free London, told the Guardian: “This demonstrates that, in at least one case, the government’s transition export development guarantee scheme has facilitated greenwashing.
“It should not be possible for a company to receive a green transition loan and then double down on the expansion of its fossil fuels business.”
A spokesperson for Wood responded that the group remains committed to playing a critical role in the energy transition, in the short, medium and long term.
“We have leading expertise across clean energy solutions such as green hydrogen, CCUS [carbon capture, utilisation and storage] and support the mineral production critical to resourcing the energy transition - but a significant part of our role is also supporting our oil and gas and wider industry clients to decarbonise their operations.
“The KPI measures of the loan centre on reducing our own scope one and two emissions and growing our sustainable revenues,“ the statement continued. “We are pleased that we achieved a 65% reduction in our scope one and two emissions.“
Wood's business was repositioned following the sale of its built environment business in 2022, with two-thirds of the bank loan value paid down.
“This change was a contributing factor to the reduction in our sustainable revenues in 2022, however we have stated that we anticipate significant growth in sustainable revenues from sectors such as hydrogen and CCUS through to 2025 and beyond,” the spokesperson added.
The loan, which was worth $600m over a five year-term, has now been paid down by two thirds. Wood also pointed out that it was not directly from the government, rather they acted as a guarantor to money provided by international banks.
The group argued that since the loan was given, the Russian invasion of Ukraine has changed priorities for many to energy security, but noted that as part of a 'strategy refresh' and executive team reshuffle in November 2022 “lower carbon solutions for energy and materials are at the forefront of this three-year strategic cycle“.
Over this period, Wood stated that it expects to see a “significant increase“ in sustainable revenue, driven by decarbonisation, as well as rapidly growing clean energy markets of carbon capture and storage and hydrogen.
“Wood’s role in delivering energy transition solutions remains, with over 20% of revenues today directly attributed to sustainable solutions, including renewables, hydrogen, sustainable fuels and carbon capture. In addition, the majority of our contracts in oil and gas have an element of carbon intensity reduction,“ added a statement.
It also pointed out that the Guardian report omitted at least 20 new work projects directly related to sustainable solutions since July 2021.
These include a contract with HYGEN Energy to accelerate production of green hydrogen production plants across the UK for decarbonising UK transportation, a contract with Renewable Energy Group in the US for the upgrade and expansion of a renewable diesel biorefinery in Louisiana and more than 20 CCUS projects, including Acorn, Teeside and HumberZero in the UK.
A UKEF spokesperson told the Guardian: “We are firmly committed to supporting the UK’s transition towards a low-carbon economy as part of our 2050 net zero target.
“Our transition export development guarantee requires firms to report progress against a climate transition plan to deliver their commitments.”
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