Most of the world's largest oil companies have cut research spending sharply since 2013 as they strived to save money in the face of the slump in crude prices, raising concerns about their ability to compete in a changing energy landscape.
BP made the biggest cuts, reporting a 41 per cent drop in its research and development spending for 2013-15, in part because of its decision to stop work on advanced cellulosic ethanol.
The other large western oil groups have mostly made cuts of 15-20 per cent, company reports show, with the exceptions of ExxonMobil of the US and Eni of Italy, which have cut by just 3 and 2 per cent respectively.
The fall in R&D budgets prompted warnings that the companies were undermining their ability to develop more challenging oil and gas resources, or to invest in alternatives to fossil fuels.
After the plunge in the oil price that began in mid 2014, most of the largest oil companies, with Eni the principal exception, pledged to maintain dividends. They have been cutting capital spending and operating costs to keep their borrowings under control.
BP says it is focusing R&D spending on where it will have the most impact. Brian Gilvary, chief financial officer, told analysts last month that the company would not "drive the bus off a cliff" in sacrificing long-term growth to hit short-term financial targets.
However, analysts and investors worry that R&D cuts will slow the introduction of new technologies and reduce future oil and gas production.
David Lawrence of Lawrence Energy, an investment firm, said large companies had been putting a lot of effort into techniques for enhanced oil recovery, squeezing additional output from mature oilfields. "If new methods are going to be delayed, that could take its toll in terms of downwards pressure on supplies," he said.
R&D cuts also hit the development of new technologies that could replace fossil fuels.
Varun Sivaram, of the Council on Foreign Relations, a think-tank, said entrepreneurial efforts to develop alternative energy faced difficulties because the costs of deployment are so high. "The fact that there are few oil companies willing to play a role in clean tech has reduced the opportunities for entrepreneurs," he said.
Total of France, which last week agreed to buy battery manufacturer Saft for €950m and also owns 60 per cent of solar company SunPower, is unusual among big oil groups in supporting commercial deployment of alternative energy, but it too cut its R&D spending by 15 per cent over 2013-15.
Vijay Swarup, vice-president of research and engineering at Exxon, said the company's commitment to its R&D programme was "very encouraging".
Exxon has high-profile long-term research programmes, including work on extracting biofuels from genetically modified algae launched in 2009, and the alliance to develop new technology for capturing carbon dioxide from power plants, announced earlier this month.
"Markets fluctuate, but we know that science does not," Mr Swarup said. "You have to be patient. The cycle from discovery to deployment can take decades."
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