Riding on a wave of determination to kick fossil fuels, Denmark's largest company is selling off its oil sector, a move that will help the Danes fund their transition to green energy use.
Denmark is “selling off its last oil company,” Bloomberg reported. But like most matters regarding business and the economy, things aren't as simple as they seem.
The milestone came when Danish giant AP Moller–Maersk, best known for shipping and transportation, signed an agreement selling its entire oil division to French company Total SA for a chunky $7.45 billion. The deal is not set to complete until next year, as it requires regulatory approval, but the Danes have applauded the decision so far.
“The more money they make on the North Sea, the more money there will be for us to spend on the green transition,’’ Energy Minister Lars Christian Lilleholt said in an interview with Bloomberg.
Whilst the deal looks ideal on paper, it will not stop Danish North Sea oil from being pumped. The Danish government will continue to earn money indirectly from oil through tax revenues, although these profits will help Denmark meet its target to kick the habit of fossil fuels by 2050. Meanwhile, private companies will also continue to be rewarded with the fruits of Danish oil.
“By selling to Total, we ensure a continued Danish stronghold in the North Sea based on Maersk Oil’s leading position within technology development and its track record as a lean, efficient and trusted partner," explained by Claus V. Hemmingsen, Vice CEO of AP Moller–Maersk, in a statement. "Importantly, Maersk Oil will remain close to its technology and innovation partners at the Danish technical institutions and in the oil and gas service industry to the benefit of all parties.”
Despite the catch-22 of using oil profits to transition to renewable energy, Denmark appears to be at the world's forefront in terms of green energy use. The Danish government has set the ambitious target of completely weaning the country off oil, coal, and gas by 2050. It also wants to cut fossil fuel dependence by 33 percent over the next 10 years alone.
Earlier this summer, another Danish energy giant, DONG Energy, sold North Sea oil and gas production to a German company for $1.3 billion. DONG Energy is replacing all of its coal power plants with sustainable biomass fuel and is the world’s largest offshore wind farm developer.