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M&A’s Sluggish for Renewables in 2023 // Aramco Wants In On LNG

Welcome to Grid Brief! Here’s what we’re looking at today: a report from LevelTen logs a slowdown in renewable energy mergers and acquisitions, Aramco wants to get into LNG, and more.

M&A’s Sluggish for Renewables in 2023

According to a new report from analysis firm LevelTen, renewable energy asset acquisitions in the US renewable energy industry slowed considerably last year. This marked a shift from the sector’s usual land-grab posture.

Previously, developers would pump up the volume of projects in their queue because 80% of them wouldn’t succeed. But the interest rate hikes over the last year made that untenable.

“All of the sudden both large and small players looked at their pipeline and said wait a second, what are we doing? Should we be more disciplined in where we are focusing our energy?” Patrick Worrall, vice president of M&A solutions at LevelTen Energy, told Utility Dive. “You have big developers talking about 30 GW in their pipeline.... Is that a good use of time and capital to be trying to manage a pipeline of that size?”

LevelTen declined to publicly disclose their numbers, but said that despite this year’s rebound since Q4 of 2023, they predict that the market won’t regain the “old normal.”

Aramco Wants In On LNG

Saudi Aramco is looking to develop liquified natural gas projects.

“The world’s biggest crude oil exporter is in ‘discussions with a number of entities in the US and other regions,’ Chief Executive Officer Amin Nasser said on an earnings call with reporters,” reports Bloomberg. “The company will focus on LNG internationally and look to use its gas output at home to produce blue hydrogen and power, he said.”

Aramco’s turn towards the LNG market comes as Abu Dhabi and Qatar have announced aggressive LNG plans of their own. For more on Qatar’s plans, check out our recent premium coverage on their LNG ambitions.

Aramco is already working out a potential $500 million deal with an Australian LNG company and is contemplating further collaboration.

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Conversation Starters

  • Bank of America to expand its energy transition business. “Bank of America Corp. plans to expand the scope of its commodity energy transition business, a move it says will require additional headcount as more clients look to reduce their carbon footprint. The bank is expanding its presence in global gas and power markets as well as in environmental products trading in response to client demand, according to George Cultraro, global head of commodities trading,” reports Bloomberg. “Identified by BlackRock Inc. as a “mega” force that’s already driving markets and economies, the energy transition has been widely hailed among financial professionals as a vast money-making opportunity.”

  • Japan’s dependence on Australian LNG deepens. “Resource-scarce Japan is shoring up long-term supplies of liquefied natural gas from close allies Australia and the United States as key contracts from providers including Russia are set to expire by the early 2030s,” reports Reuters. “Japan's biggest power generator JERA last month agreed to buy a 15.1% stake in Woodside Energy's Scarborough project in Australia. It was the latest in a string of deals as the fallout from Russia's invasion of Ukraine threatens to disrupt access to gas from its northern neighbour, making it more imperative to find reliable long-term supply sources. LNG accounts for about a third of Japan's power generation and it is the world's second-largest importer behind China.”

  • The US remains the top crude producer. “The United States produced more crude oil than any nation at any time, according to our International Energy Statistics, for the past six years in a row. Crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023, breaking the previous U.S. and global record of 12.3 million b/d, set in 2019. Average monthly U.S. crude oil production established a monthly record high in December 2023 at more than 13.3 million b/d,” reports the Energy Information Administration. “The crude oil production record in the United States in 2023 is unlikely to be broken in any other country in the near term because no other country has reached production capacity of 13.0 million b/d. Saudi Arabia’s state-owned Saudi Aramco recently scrapped plans to increase production capacity to 13.0 million b/d by 2027.”

Crom’s Blessing

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