Chevron (CVX), Mercuria Close JV to Buy American Natural Gas
Chevron Corporation’s CVX subsidiary Chevron U.S.A. Inc. recently concluded the formation of its joint venture (JV) with one of the world's leading integrated energy and commodities firms Mercuria Energy Trading (Mercuria). Soon after, the new JV bought American Natural Gas LLC (ANG), a Saratoga Springs, NY-based company, which operates 60 compressed natural gas (CNG) stations across the United States.
The transaction is part of Chevron’s attempt to develop a large-scale, vertically integrated renewable natural gas business in America. The company is developing projects to create renewable natural gas from cow manure across the country through partnerships with Brightmark and California Bioenergy. The integrated energy firm will be able to swiftly expand its renewable natural gas value chain, courtesy of this joint venture, which will complement its previously announced plan to open more than 30 Chevron-branded CNG stations by 2025.
Chevron aims to produce 10 times more renewable natural gas within the aforesaid year than it did in 2020 as part of its greater returns and lower-carbon strategy. The acquisition under discussion will help the company expand its renewable natural gas business and assist clients to minimize their carbon footprint.
Energy companies face the onus of finding new lines of business as investors and activists keep emphasizing on climate-change concerns. The entire energy sector is prepping for a tremendous transformation into renewable energy resources for powering all industrial fields as global warming persists due to emission of greenhouse gases.
The majority of oil and gas supermajors including BP plc BP and Royal Dutch Shell (RDS.A) promised to become net-zero energy firms by 2050 and heavily invest in renewable and low-carbon energy alternatives.
As the focus on energy transition deepens, San Ramon, CA-based Chevron sealed eight deals in the last few weeks to invest in hydrogen, green jet fuel and renewable natural gas for portraying a better image to investors in the run-up to an investor presentation on environmental, social and governance (ESG).
Of those eight pacts, one is a letter of intent signed by the currently Zacks Rank #3 (Hold) energy player and the renewable energy firm Gevo to jointly invest in the construction and operation of one or more new facilities for converting inedible corn into sustainable aviation fuel (SAF). This will lower the lifecycle carbon intensity of aviation fuels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Last month, Chevron announced that it will develop sustainable aviation fuel as a pilot project and sell it to Delta Air Lines DAL at the Los Angeles International Airport. The development of SAF is another strategic objective that is being chased by the company to achieve carbon neutrality as biojet fuels help trim toxic emissions from air transportation.
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