European and U.S. upstream firms diverge on low-carbon technology deals

Europe remains the focal point for E&Ps investing in M&A power deals that utilize low-carbon solutions such as solar and offshore wind.

E&P companies engaged in 231 power deals between 2021 and 2023. This represents around 10% of all power deals worldwide, according to Evaluate Energy data. Only 13 of these power deals involved fossil fuel-based technologies.

Ninety-nine deals were targeted in Europe, followed by North America with 45. The data illustrates that many EU firms have moved into renewable power while U.S. firms focus on renewable fuels, hydrogen and CCUS.

The five leading E&Ps executing power deals were all European: TotalEnergies (38), Shell (27), Eni (26), Equinor (21), and BP (15). Only seven deals of North America’s 45 were agreed by U.S.-based E&P companies – and three of these were by one firm, Genie Energy, a provider of green and conventional electricity and natural gas supply plus solar energy solutions.

Regional spread

Not all deals done by European firms were EU focused. Firms’ net zero targets require them to reduce carbon intensity across their entire portfolio. This means renewable schemes in any geography count towards the overall target. Regions outside Europe often have cheaper construction costs and more abundant solar and wind resources.

Of the 38 deals done by TotalEnergies, only 12 were situated in Europe, with the rest in Africa, Central Asia, or Asia-Pacific.

Of the 27 deals by Shell, only 10 were in Europe. The rest were in Central Asia, Asia-Pacific, North America, or Latin America.

Eni was more European-focused, with 19 of its 26 deals taking place in Europe, with the remainder in North America, Central Asia, or Asia-Pacific.

Technology mix

Solar is by far the largest investment segment, with just under a third of all E&P power deals (78). They are spread mainly across Europe (26), North America (15) and Asia-Pacific (15). There are notable deals outside those regions – including BP’s 40.5% equity stake in the Asia Renewable Energy Hub (AREH) in Australia.

Offshore wind is the next largest segment with 51 deals. Offshore wind is often a good fit for oil and gas firms using marine and project management experience to add value.

Onshore wind has seen less interest with 31 deals.

Electric vehicle charging infrastructure saw 16 deals by E&Ps. Notably six of these were done by BP. One of the biggest BP deals involves a joint venture with Spanish utility Iberdrola to invest €1bn ($1.08bn) in 5,000 EV charging stations in Iberia by 2025 and 11,700 by 2030.

Shell is also looking at EV charging with three deals in the space, two of which involve working with original equipment manufacturers — China’s Nio and GM in the U.S.

The geothermal sector saw 12 deals – two by Chevron. There is growing geothermal interest amongst U.S. E&Ps after development funding was released by the Biden administration. The U.S. House Energy and Commerce Committee last month passed a bipartisan bill to streamline geothermal project permitting.

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.