TotalEnergies (TTE) Inks Deal for Carbon Storage Hub in Malaysia
TotalEnergies SE TTE announced that it has entered into an agreement with Petronas and Mitsui & Co. MITSY to develop a carbon storage project in Southeast Asia. This deal aims to provide a carbon dioxide (CO2) merchant storage service in order to decarbonize industrial customers in Asia.
The partners will assess a number of CO2 storage locations in the Malay Basin, including both saline aquifers and depleted offshore fields. They will need a specific regulatory framework and significant investment for development of a Carbon Capture and Storage (CCS) value chain for hard-to-abate industrial emissions.
Per the terms of the deal, the companies will research a number of prospective storage locations, decide on the best technological method for delivering CO2 from regional industrial clusters to Malaysia, and create the most appropriate business framework for Malaysia’s commercialization of a carbon storage service.
Importance of Carbon Storage Hub
Industrial Hubs provide a place for businesses, such as industrial manufacturers that provide the services and products necessary for modern life, to capture and permanently store their CO2. When companies come together to share a hub, this helps drive down costs. Sharing the upfront infrastructure costs, such as pipelines, makes CO2 storage a more attractive solution.
Per a report by the International Energy Agency, 2022 was a strong year for carbon capture, utilization and storage (CCUS). More than 140 new projects were announced, increasing planned storage capacity by 80% and capture capacity by 30%.
In 2022, more than 210 million tons (Mt) of new CO2 dedicated storage capacity was announced, up from 100 Mt in 2021 and 70 Mt in 2020.
TotalEnergies’ focuses on avoiding or at least reducing its emissions by developing and deploying a systematic, asset-by-asset approach to implement the best available technologies.
For residual emissions, the company is developing industrial projects for carbon storage. TTE is on track to achieve its target of developing storage capacity of 10 million metric tons of CO2 per year by 2030. It plans to do so through significant industrial projects such as Northern Lights in Norway and Aramis in the Netherlands. This way, the company will be able to reduce its own emissions and those of its customers.
Along with TTE, other oil and gas companies like Chevron Corporation CVX and Talos Energy Inc TALO are also adopting and expanding their carbon capture projects.
In March 2023, Chevron and its partner, Talos Energy disclosed that they have tripled the size of a projected carbon capture and storage hub for the Gulf Coast. CVX reported that it has acquired approximately 100,000 acres of onshore land in the Texas counties of Chambers and Jefferson, thereby expanding its CO2 storage footprint. It will invest $10 billion in its low-carbon initiatives until 2028, including CCUS and hydrogen fuel.
Chevron’s long-term (three- to five-year) earnings growth rate is 14.3%. It delivered an average earnings surprise of 7.7% in the last four quarters.
The Zacks Consensus Estimate for TALO’s second-quarter 2023 earnings per share (EPS) is pegged at 42 cents. The same for 2023 EPS is pinned at $1.26.
Price Performance
In the past three months, shares of TotalEnergies have lost 2.5% compared with the industry’s 6.5% decline.
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Zacks Rank
TotalEnergies currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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