CCUS deal-making by upstream oil and gas firms is rising

Global interest among E&P firms in Carbon Capture, Utilization and Storage (CCUS) project deal-making is starting to ramp up.

95 CCUS-related deals have been announced over the past three years involving upstream companies based on Evaluate Energy data. This represents around 53% of all CCUS deals worldwide since the start of 2021, and 2023 saw the ratio increase to 63%.

Equity financing and interest in project finance for CCS projects has increased significantly over the past 12 months, as national funding strategies start to emerge, according to the Global CCS Institute’s ‘Status of CCUS report’. A U.S. CCS tax credit regime was established in 2023 and an EU strategy is due this year.

Majors lead the way

Malaysia’s Petronas is the most active with ten CCUS-related deals. All were co-operation deals, as the firm looks to evaluate its involvement at various points in the value chain. Two involve evaluating storage sites, four evaluating the potential of CO2 shipping, and one the development of a storage hub in the Java Sea. The remainder relate to an interest more broadly in investigating the technology.

Chevron is the second most active with nine deals. One involves a 50% equity stake in the Bayou Bend CCS project in Southeast Texas, where Talos Energy and Equinor also have stakes.

Chevron also has interest in the firms Carbon Clean and Svante, as well as Blue Planet Systems, a building material CO2 sequestration developer. Chevron’s other deals signal broad co-operation in investigating the technology, albeit with a wide geographical footprint — the firm has deals in Australia, Indonesia, Kazakhstan, and the U.S. Chevron already runs a significant CCS project at its Gorgon LNG plant in Australia.

ExxonMobil is the third most active in the sector with eight pure CCS deals, which rises to nine if the company’s $4.9 billion deal to acquire U.S. oil and gas producer Denbury Inc. is included, due to CCS potential forming a huge part of ExxonMobil’s motivation for the deal.

ExxonMobil has entered into two deals on capture testing projects, both in the U.S. The first is a partnership with technology firm FuelCell Energy assessing the latter’s capture technology, and the second is a partnership with steel firm Nucor assessing a full CCS value chain at Nucor’s manufacturing site in Convent, Louisiana. Unlike Chevron, ExxonMobil is yet to take an equity stake in CCS technology firms.

Shell is the next most active company with seven deals. One involves participation in the same UK licensing round as ExxonMobil to investigate North Sea storage locations. Shell will work with ExxonMobil on three locations and evaluate a further two, while ExxonMobil won the license for a further location of its own. Shell’s remaining CCUS deals involve co-operation across various parts of the value chain.

Around the world

The U.S. has seen 29 deals by E&P firms over the past three years, reflecting the dominance of U.S. firms in CCS deals and the U.S. CCS tax credit regime, put in place last year.

Asia-Pacific has seen 27 CCS M&A deals. The region has significant potential for growth and a number of projects are being developed. This includes the Arun project in Indonesia, which has potential to sequester one billion metric tonnes of CO2 and may include open access storage, paving the way for a network of capture projects.

Europe is the next most popular region with 22 deals, which includes 12 E&P companies awarded licenses for storage locations in the UK’s first license round. The EU doubled funding for CCS to €3bn in 2022, and issued its second call for projects last year, meaning there is likely to be a further uptick in activity as the value chain develops.

Evaluate Energy’s M&A database holds every upstream deal worldwide since 2008, allowing daily comparisons of key metrics, corporate valuations and changes in spending behavior over time. For more on our data, which also includes data on downstream, midstream, service sector and renewable energy M&A activity, click the button below.

 

Return to https://blog.evaluateenergy.com for more from Evaluate Energy