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ExxonMobil (XOM) Signs Deal to Explore CCS Project in China

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Exxon Mobil Corporation XOM teams up with Shell plc SHEL and CNOOC Limited to assess the feasibility of a world-scale carbon capture and storage (“CCS”) project in China.

The companies signed a memorandum of understanding to explore CCS opportunities to reduce emissions at the Dayawan Petrochemical Industrial Park in Huizhou.

The deal enables the companies to leverage their global expertise and technology to help China reach its target to achieve carbon neutrality by 2060. ExxonMobil and partners will also assess the carbon policy systems in China. They will propose policies to support the deployment of CCS projects in Dayawan Petrochemical Industrial Park.

Based on initial assessments, the project is estimated to capture up to 10 million metric tons of carbon dioxide per year from the industrial sector in Dayawan. It could also serve as an example for the chemical industry as one of the first petrochemical projects to be decarbonized. The companies did not disclose any financial details or a schedule for making an investment decision for the project.

Oil and gas companies are getting actively involved in CCS projects as it offers a transition pathway for the rapid and effective reduction of CO2 emissions beyond what can be achieved by alternative methods like electrification and renewable fuels. Thus, the use of carbon capture and storage in reducing industrial emissions offers an excellent opportunity.

ExxonMobil has more than 30 years of experience in capturing carbon dioxide. The company has an equity share of one-fifth of the world’s carbon capture and storage capacity at 9 million metric tons per year.

China’s increasing demand for CCS offers significant opportunities for Shell to expand its decarbonization business. Hence, Shell has been proactively working to evaluate the Daya Bay CCS Hub to help integrate and expand its growing low-carbon energy contributions to the country.

CCS provides ways to reduce emissions from emission-intensive sectors. Shell’s CCS strategy is crucial to its climate target to be a net-zero emission company by 2050. The company aims to have access to the CCS capacity of at least 25 million tons per year by 2035.

Company Profile & Price Performance

Headquartered in Irving, TX, ExxonMobil is one of the leading integrated energy companies in the world.

Shares of ExxonMobil have outperformed the industry in the past six months. The stock has gained 53.7% compared with the industry’s 29% growth.

 

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Zacks Rank & Key Picks

ExxonMobil currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Imperial Oil Limited IMO is one of the largest integrated oil companies in Canada. IMO’s debt-to-capitalization of 18.9% is quite conservative versus 32.1% for the sub-industry to which it belongs.

Imperial Oil remains strongly committed to returning money to investors via dividends. The company’s board of directors approved a hike in quarterly dividend payment. The new payout of 34 Canadian cents is 26% above the prior dividend. Further, Imperial Oil revised its existing share repurchase policy to buy up to 4% of outstanding common shares.

Valero Energy Corporation VLO is the largest independent refiner and marketer of petroleum products in the United States. Among all the independent refiners, VLO offers the most diversified refinery base, with a capacity of 3.2 million barrels per day in its 15 refineries located across the United States, Canada and the Caribbean.

Valero is poised to benefit from the new standard set by the International Maritime Organization. Per the standard, which was effective since January 2020, the proportion of sulfur in marine fuel has declined to 0.5% from the previous 3.5%, thereby boosting demand for distillate fuel. Valero, being a producer of a significant amount of distillate fuel, is expected to capitalize on this.


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