“Corporate venture investments by oil and gas companies hit record highs in 2016 and 2017, after a slight dip following the 2014 crash in oil prices.” – so says CB Insights after extensive analysis of investment activity of a selection of the largest and most active companies across the Oil & Gas value chain.
In fact, such is the trend in Corporate Venturing within the Oil & Gas sector that not only have they taken an equity stake in about half of all oil and gas start-ups that have raised funding, but they have also committed hundreds of millions of dollars to petroleum substitutes like biofuels, solar, and wind. And it’s no wonder: with annual revenues of more than $1’500 billion, the energy industry is one of the largest sectors of the economy that also contributes significantly to a number of environmental problems, such as climate change due to greenhouse gas emissions.
The pressure is on.
Types of Investments:
According to studies conducted by CB Insights, it would appear that the two main areas of corporate investment within the Oil & Gas industry was that of clean tech as well as businesses that focussed on operational improvement. The investment into #CleanTech predominantly looked at 3 critical areas:
- alternative energy sources such as wind, solar, hydro and the development of advanced batteries
- alternative material sources with the potential to replace petrochemicals
- environmental impact: technologies with the potential to mitigate the environmental impact of burning hydrocarbons
Another clear area of distinctive investment within the Oil & Gas industry is that of Operational Improvements. We see this across sector – larger organisations are trying to move forward by embracing the new, the tech, the digitally-disruptive – and the Oil & Gas sector is no different. In this case, they are investing in technology that offers them the potential to enhance O&G company operations through things like IIOT, analytics, and reserve replacement and enhancement capabilities.
Still picking up speed, Corporate Venturing within Oil & Gas also remains heavily focussed on new technology and digital disruption within the sector with most corporate investors adding operational improvement to their investment portfolio. Having a total of 54 investment deals to date, Chevron has invested 26% of their portfolio into the Clean Tech world, and a whopping 69% into operational improvement. BP, on the other hand, has flipped the tables investing 70% into Clean Tech and only 13% into operational improvement. Total has followed suit with most of their investments leaning towards Clean Tech and Shell having a more balanced investment portfolio with close to half of their investment in both courts.
What the analysts say:
Kaloyan Andonov, reporter with Global Corporate Venturing Analytics writes: “Recently we have seen electric storage and management tech companies appear on the news in venturing and acquisition deals, involving oil and gas companies. Oil and gas majors, alongside car manufacturers, tend to be major corporate backers of such technology developers, as they anticipate a transition to a low-carbon future relying on more sustainable and cleaner energy sources”
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