Occidental Petroleum to Acquire Carbon Engineering in $1 Billion Deal
Occidental Petroleum plans to acquire Carbon Engineering in a deal worth over $1 billion. This acquisition reflects the increasing interest of major oil companies in carbon mitigation companies. The transaction is expected to be finalized by the end of the year, as stated in a recent release. Occidental aims to develop carbon air capture solutions to align with the growing importance of clean energy in the corporate sector. The two companies have previously collaborated on various projects. Occidental’s shares have risen slightly by just over 1% year-to-date. The company, which is a prominent holding of Warren Buffett’s Berkshire Hathaway, is among the few businesses exploring the capture, use, and storage of carbon as a long-term business opportunity. Carbon capture, utilization, and storage (CCUS) are considered vital in the transition towards clean energy. CCUS offers an alternative approach to managing emissions that are difficult to avoid by storing or reusing carbon rather than eliminating its usage completely.
Gordon Haskett analyst Don Bilson commented, “Other than maybe Barbie dolls, nothing is flying off the shelves faster these days than ‘Carbon Capturers.'” The acquisition of Carbon Engineering is expected to accelerate Occidental’s timeline for introducing a global carbon removal offering. CCUS projects have gained traction in recent years, although they have been in existence for approximately five years. However, according to energy research firm Wood MacKenzie, global carbon storage volume needs to increase more than fourfold by 2050 to limit global warming to 1.5 degrees above pre-industrial levels.
Occidental’s focus on CCUS has attracted attention on Wall Street, with Goldman Sachs identifying it as a potential beneficiary of the Inflation Reduction Act’s benefits for carbon storage. Other companies such as Baker Hughes, Weyerhaeuser, and Bloom Energy are also being closely watched by Wall Street firms as potential winners in the growing carbon technology sector.
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