If it wasn’t clear enough already, there’s an almighty race between Big Oil and Gas to lead the energy transition and, if February 2019 is anything to go by, M&A activity is ready to fuel it.
Mitsubishi kicked things off on Valentine’s Day with the purchase of a 20% stake in OVO Energy which, the energy firm said, would help it fund the development of its tech arm Kaluza and an international expansion. The very next day Shell announced it was converting its investment into German battery storage firm sonnen into a full-blown acquisition, welcoming the company into its New Energies division. Two weeks later and Shell was on the hunt again, this time acquiring Limejump for an undisclosed fee.
Shell New Energies would, for all intents and purposes, appear to be some kind of shared co-working space for the energy transition. Like WeWork is for media companies, only instead of baristas handing out flat whites to millennials*, there are oil execs handing out cheques to energy tech firms with a clear(er) idea of the power sector’s direction of travel.
(*We can say this as one such media company based out of a WeWork these days)
It’s little different elsewhere. BP’s Alternative Energies division is too picking up stakes in clean energy companies and using them to their advantage. Positions in Lightsource and Chargemaster have catapulted BP towards the front of solar development and EV charging networks, and both firms have been placed front and centre in BP’s most recent round of advertising – its biggest in more than a decade.
Centrica, too, are investing heavily. Its Innovations division celebrated two years in operation earlier this month with investments in home energy management solutions provider GreenCom Networks and smart hot water specialist Mixergy. Of course, a few days after it became all the clearer why Centrica would be looking to get to grips with the transition.
Before the week was out, Centrica’s share price had dipped to a 20-year low. Supply market pressures, dipping performance from its O&G and nuclear divisions and, crucially, further regulatory turmoil in the year ahead made for grim reading for investors. Surging performance of its Connected Home and Distributed Power divisions could only partially offset troubles elsewhere.
In many ways, Centrica encapsulates the trials and tribulations of the energy transition in action. Its current position isn’t all that healthy, but it has a vision of where it wants to get to. Transitioning from the former to the latter stands to be a bumpy ride, and the driver might not see the journey out, but the car is at least moving forward.
The same can’t be said for every O&G major. This week also happened to be International Petroleum Week where the chief exec of Saudi Aramco told a room full of carbon enthusiasts and a gaggle of journalists that oil and gas’ main problem was one of perception.
That perception being that it’s becoming abundantly clear that the future for oil and gas is anything but. Discussions across the editorial desk at Current± Towers this week – over a flat white, of course – led us to come to the only sensible conclusion that Legacy O&G is now nothing more than a Mitchell & Webb sketch waiting to happen.
Of course, the likes of Shell New Energies, BP Alternative Energies and Centrica Innovations are proof it doesn’t have to be this way. There’s (just) enough time for O&G to shift gear and get themselves on the road to decarbonisation.
Then it’s a question of how quickly can that race intensify even further, because, if the last two days in the UK are anything to go by, it sure needs to.