The Oil and Gas Climate Initiative’s (OGCI) new decarbonization investment fund is garnering attention from potential oil and gas investors, an OGCI managing director said.
OGCI Climate Investments, an independently managed investment vehicle launched in 2017, manages a 10-year, $1.2 billion fund focused on decarbonization solutions. The fund invests in companies, technologies and projects aimed at reducing global methane and CO2 emissions from hard-to-abate sectors like oil and gas.
OGCI itself was established by 12 major oil and gas companies, including Exxon Mobil, Chevron, Shell, BP and Aramco, which collectively account for about 30% of global operated oil and gas production.
As time has gone on since launching, more industry players are showing interest in the OGCI and OGCI Climate Investments models, OGCI Climate Investments Managing Director David Horsup said May 1 at the Offshore Technology Conference.
“The first fund is a closed fund for those 12 large oil and gas companies,” Horsup said. “There are many other oil and gas [companies], service companies and other industrial players that have come to us and said, ‘We love what you’re doing. How can we get involved?’”
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Now, OGCI is raising more than $1 billion for a second, 10-year decarbonization investment fund to focus on later-stage investment opportunities, Horsup said.
The new fund will provide growth equity financing for companies or projects seeking to scale. That could mean funding to ramp up production, expand into a new geography or to pursue mergers and acquisitions, he said.
Not only supermajors and major oil and gas corporations, but also smaller, independent oil companies have shown a fair amount of interest in accessing OGCI Climate Investments’ global deal flow.
Oil and gas companies are looking at ways to diversify their product portfolios with investment opportunities in renewables, biogas, geothermal and other low-carbon energy services, he said.
“If they don’t have their own corporate venture capital group to actually invest through a partner like OGCI, they get access to all of our deal flow,” Horsup said. “It gives them a very rich scene to then go and evaluate for adjacent step-out plays.”
OGCI Climate Investments has made 32 investments in companies and projects since launching. The fund’s portfolio companies have realized a greenhouse gas impact of more than 50 million tons of CO2 equivalent since launching.
Horsup declined to disclose exact figures, but said OGCI Climate Investments’ first fund has an internal rate of return in the “very high-teens.”
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