Europe and US dominate hydrogen deal-making by E&Ps

Europe and to a lesser extent the United States remain focal points for hydrogen project deal-making by E&P companies.

Evaluate Energy data shows that E&P companies were involved in 112 hydrogen sector deals between 2021 and 2023, which represents around 33% of all hydrogen sector deals worldwide over the three-year period.

The mix of deals is interesting – a blend of production-focused plays and downstream technologies. TotalEnergies, Shell and Chevron led the way. Hydrogen deal volume has slowed, however, and was noticeably light in 2023.

Over half the deals took place in Europe or the United States.

Deal locations reflect the reality that Europe and North America are more advanced in their hydrogen strategies and subsidy regimes. The US instigated its tax credit subsidy regime last year. The EU published its hydrogen strategy in 2020 and held the first pilot auction under its Hydrogen Bank subsidy scheme at the end of last year. These are vital in helping firms reach final investment decisions (FID) on production projects.

Of the 112 deals:

• 67 reference hydrogen production
• 23 mention co-operation on specific pilot projects
• 10 involve collaborating with companies in the midstream to develop hydrogen distribution or storage solutions
• Nine revolve around hydrogen re-fuelling solutions or downstream fuel cell development.

For those that involve establishing pilot projects, once these are running it will be another couple of years before firms reach FID on a commercial scale project.

Only one deal so far — Abu Dhabi state oil company ADNOC acquiring a 25% stake in H2 Teeside — outlines a concrete equity stake in a project, signaling ADNOC’s confidence it will get to FID.

A recent report by the Hydrogen Council notes that just seven per cent of announced investments into hydrogen projects have passed FID to date.

“Projects are expected to commence first in mature markets, before large greenfield installations integrated with renewable energy sources gradually…become another important market segment,” reflected Norwegian electrolyzer manufacturer Nel in its Q1 2023 market outlook.

That wave of activity may lead to a second round of M&A deals as E&P companies take further equity stakes in hydrogen production projects, although many will also be looking to raise finance via debt.

M&A activity further down the value chain for hydrogen — whether that be supporting infrastructure such as storage and pipelines, shipping and transport or downstream applications such as mobility and fuel cells — could also be expected to pick up from 2025 as FIDs on hydrogen supply projects, the key enabling factor, trigger firms to form JVs or transform MOUs into equity stakes in the downstream.

Most active acquirers

TotalEnergies

TotalEnergies was the most active E&P company in the sector in terms of deal making over the three-year period with 13 deals. Alongside a series of co-operation deals, the French major agreed deals to acquire interests in companies active in both India’s green hydrogen sector and Europe’s hydrogen vehicle space.

Shell

The E&P company with the next strongest M&A interest in the sector was Shell, with 12 deals. All but one were co-operation deals. Shell’s single corporate deal was to invest in Hydrogen Mem-Tech, a firm that has developed a technology to produce clean hydrogen from biogas and natural gas.

Chevron

Chevron did nine deals in the same period. Four relate to hydrogen production. The rest address downstream technologies. Of the four corporate deals agreed by the U.S. supermajor, three relate to downstream: an outright purchase of storage firm Magnum Development, a stake in refuelling firm OneH2, and a stake in distribution firm Aces Delta.

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.

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