Oil and gas corporate venture capital investment database first half 2021 update: Oil and gas corporate venture capital investment reaches a new high, and interest in core E&P technologies a new low

The IHS Markit Oil and Gas Corporate Venture Capital Investment Database tracks investments in early-stage energy technology companies. This biannual update adds investments made during the first half of 2021 to those we have tracked since January 1998. Data collected include the name of the startup, oil and gas sector investor(s), startup location, technology category, investment round, and funding amount (when available).

As the oil and gas industry shifts toward more open innovation strategies to source many of its key technology needs, corporate venture is one such approach that allows companies to access new ideas and solutions under development in early-stage technology companies. This close tracking of corporate venture investment activity provides a window into emerging industry technology and business trends, including:

• Corporate venture investments continue to be a strong source of innovation for the oil and gas industry. Oil and gas corporate venture capital groups participated in a record 60 rounds of startup funding during the first half of 2021, demonstrating its full recovery from pandemic related disruptions. If 2021 investment activity maintains its current pace, this year will set a new high in startup investments by the oil and gas industry.
• Oil and gas cleantech investments are supporting the global energy transition. During the first half of 2021, 67% of oil and gas corporate venture investments supported startups developing clean energy technologies in such areas as CO₂ utilization, hydrogen production and renewable energy generation. Cleantech is expected to remain a dominant investment theme as new energy and sustainability become more prominent features of broader oil and gas company strategies. As pressure to accelerate emissions reductions expands across the global economy, the oil and gas industry is seeking to play a more prominent role in broader industrial decarbonization. Oil and gas cleantech investments now seem to be entering a new phase—supporting the incubation of capital intensive, process technologies deployed at low frequency but with a potentially large impact on emissions reduction, such as low-carbon hydrogen generation (e.g., Wintershall DEA Technology Ventures's March 2021 investment in HiiROC) and zero-carbon metal production (e.g., BHP Ventures's January 2021 investment in Boston Metal). The development of these types of technologies is also well aligned with the oil and gas industry's technical and operational capabilities to finance, develop, and operate new industrial processes at scale.
• Corporate venture investing has nearly completely shifted away from its core E&P roots. Investments in core upstream technologies represented only 17% of activity during this period. Of these investments, half were follow-ons (e.g., Repsol Ventures's and Shell Ventures's May 2021 investments in multiphase flow imaging startup Rocsole) and one was a new equity investment that was the outcome of a long-term partnership.

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Posted 06 December 2021 by Carolyn Seto, Director, Upstream Research, S&P Global Commodity Insights and

Judson Jacobs, Executive Director, Upstream Energy, S&P Global Commodity Insights

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.