European oil giants are considering abandoning their stock exchanges for Wall Street

 

European oil giants Shell and TotalEnergies are considering abandoning their stock exchanges for Wall Street, a move that would deal a significant blow to London and Paris. The two companies, which are among the largest in Europe, have expressed frustration with the low value of their stock compared to US oil majors.

Shell, Britain's second-largest company, represents 8.4% of the FTSE 100 index, while TotalEnergies, France's fourth-largest company, accounts for 6% of the CAC 40 index. Despite their significant presence in their respective markets, both companies have floated the idea of moving their listings to New York.

The move would allow them to access a larger pool of capital and potentially increase their value. TotalEnergies CEO Patrick Pouyanne said last month that the company was "seriously" exploring a US listing, while Shell CEO Wael Sawan has also hinted at the possibility.

The potential departure of Shell and TotalEnergies has raised concerns about the future of the London Stock Exchange. Several companies have already left the exchange in recent years, and the loss of two of its largest constituents would be a significant blow.

Chris Beauchamp, chief market analyst at IG, said that an exit by Shell and TotalEnergies would "spark a full-blown crisis" for the London Stock Exchange. "Losing such companies would only bolster the idea that there is essentially one stock market for the globe, the US, with everything else as an afterthought," he said.

The move would also have implications for climate considerations. European shareholders have been pushing energy companies to increase their commitments to environmental, social, and governance (ESG) issues, and a move to the US could potentially reduce the pressure on companies to meet these standards.

However, some analysts believe that the probability of Shell and TotalEnergies jumping ship is low. Alastair Syme, managing director of global energy equity research at Citi, said that there are advantages to having an association with a country, and that some global energy producers would prefer to have multiple flags flying over their industrial sites.

Despite this, the possibility of two of Europe's largest oil companies leaving their home exchanges has raised concerns about the future of the region's financial markets. As the energy transition continues to shape the industry, it remains to be seen how companies like Shell and TotalEnergies will adapt and evolve in the face of changing market conditions.