Eni (E) Reaches Landmark CCS Agreement With U.K. Government
Eni SpA E, Italy's leading energy company, took a significant step toward establishing a carbon capture and storage (CCS) industry in the U.K. The company announced that it has reached a fundamental agreement with the U.K. Government’s Department of Energy Security and Net Zero regarding the essential terms and conditions governing the transportation and storage of carbon dioxide (CO2) at the HyNet North West industrial CCS cluster.
The agreement, outlined in the Heads of Terms, paves the way for finalizing definitive agreements in the coming months. This marks a milestone toward HyNet North West becoming the world’s first asset-based regulated CCS business, offering carbon transportation and storage services to companies in the North West of England and North Wales.
Eni envisions CCS as a pivotal component of the global energy transition strategy and a significant business opportunity. The company has established a leading position in the U.K., serving as the CO2 transport and storage operator for the HyNet North West consortium.
Furthermore, Eni is in the planning stage for a second U.K. CCS hub aimed at decarbonizing the Bacton Energy Hub and the Thames Estuary region. It has also secured a license to store CO2 in the depleted Hewett gas field in the Southern North Sea. The HyNet North West and Bacton hubs have the combined potential to store up to 500 million tons of CO2.
Eni anticipates HyNet North West to commence operations by the mid-2020s, initially with a storage capacity of around 4.5 million tons of CO2 per year. This capacity is projected to increase to 10 million tons annually after 2030. The project is poised to make a significant contribution to the U.K.’s target of storing 20-30 million tons of CO2 annually by 2030.
Citing the critical role of CCS in the energy transition, Eni’s CEO Claudio Descalzi emphasized the importance of the regulated model outlined in the Heads of Terms, asserting that it provides the necessary framework for scaling up the CCS sector and instilling confidence for private sector investment. He added that close collaboration with the public sector will be instrumental in developing groundbreaking projects to combat climate change.
Eni's extensive experience in gas storage in depleted fields spanning several decades will be leveraged to repurpose the existing upstream assets into CO2 storage hubs. This move is aimed at decarbonizing both Eni's own operations and those of third-party industrial activities, with a focus on cost-effectiveness and expediency.
The goal is to achieve an aggregate annual storage capacity of 30 million tons of CO2 by 2030. This will be accomplished through ongoing projects not only in the U.K. but also in Italy, Libya, Australia and Egypt.
Zacks Rank & Key Picks
E currently has a Zack Rank #5 (Strong Sell).
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