Oil and gas incumbents' green diversification: Balancing short-term returns with long-term energy transition imperatives?

This paper is designed to contribute to the burgeoning debate on the role of incumbents within the green energy transitions by unpacking the ‘black box’ of Oil and Gas (O&G) incumbents' green diversification processes. Drawing on semi-structured interviews with 22 Norwegian O&G firms, this paper sheds light on the firm-specific dynamics i.e., the micro-level O&G incumbents' strategies that underpin both the broader sustainability transitions as well as regional green diversification processes. Analytically, this paper captures incumbents' green diversification as a process that involves both inside-out and outside-in knowledge-spillover processes. Our findings show that in addition to leveraging internal O&G related synthetic knowledge, the incumbents' green diversification process is also contingent upon the development of analytical knowledge, through an outside-in knowledge spillover process, leveraging the dynamic regional green-skills ecosystems. Our paper develops crucial insights into how O&G incumbents balance short-term returns from activities in their core business with long-term energy transition imperatives, addressing the key question of whether they can be part of the solutions necessary to address climate change. As such it also responds to the recent calls to showcase how O&G incumbents are addressing the strategic dilemmas of simultaneously meeting rising energy security induced demand for energy (O&G) in recent years and global energy transition imperatives.