Rystad Energy: $150 billion in global upstream opportunities ahead

The global deal pipeline value for the upstream sector stands at approximately $150 billion, and North America will continue to lead global merger and acquisition (M&A) activity, driven by nearly $80 billion in upstream opportunities on the market, according to Rystad Energy.

The assessment follows two years of record-high transactions for the sector driven by US shale mergers. Elsewhere in the Americas, South American deal value rose from $3.6 billion in 2023 to $14.1 billion in 2024 (excluding Chevron’s acquisition of Hess), largely due to regional exploration and production (E&P) growth ambitions — and despite Petrobras halting its divestment programme.

“Last year marked a significant year of consolidation in the US shale sector, with approximately 17 consolidation-focused deals, compared to just three acquisitions in late 2023. Activity was always expected to fall after such dramatic highs, but there is still plenty of business to be done,” said Atul Raina, Vice President, Oil & Gas Research at Rystad Energy.

“North America is still a leader in M&A activity and will continue to play a key role in maintaining the market’s health. There is also potential for further upside if US shale gas M&A activity increases, assuming Henry Hub prices remain stable and conducive to dealmaking,” he added.

Centre of M&A activity

Looking beyond traditional hubs, the Middle East is rapidly emerging as a significant center for M&A activity. Bolstered by liquefied natural gas (LNG) expansion plans, the region recorded its second-highest year of M&A activity since 2019, with deal value reaching nearly $9.65 billion in 2024, following a five-year peak of $13.3 billion in 2022.

The surge in activity can be attributed to Middle Eastern national oil companies with major projects under way, such as QatarEnergy’s North Field expansion and ADNOC’s Ruwais LNG.

The North Field expansion aims to elevate QatarEnergy’s LNG production to 142 million tonnes per annum (Mtpa) by the early 2030s. ADNOC is reportedly considering awarding an additional 5% stake in Ruwais LNG to an international partner. However, ongoing geopolitical tension in other parts of the region may dampen or delay dealmaking.

UK North Sea portfolios

M&A deal value in Europe decreased by around 10% year-on-year, to $14 billion in 2024. Around 75% of the regional total centered on the UK, where majors have been adopting an autonomous model strategy to expand their presence in the North Sea. The largest deal this year involved Shell and Equinor merging their UK North Sea upstream portfolios, excluding some of Equinor's cross-border assets. The combined entity will become the largest producer in the UK North Sea, with a projected output of around 140,000 barrels of oil equivalent per day (boepd) by 2025.

Despite $8 billion worth of upstream opportunities in the region, the outlook for future M&A activity in Europe remains uncertain due to fiscal policy in the UK, which accounts for 73% of the potential deals, valued at about $5.9 billion, according to Rystad Energy.

Tightened government fiscal terms for offshore oil and gas threaten to dampen buyer interest. However, combining portfolios that balance deferred tax positions and future expenditure could be an emerging trend in the country’s M&A landscape, given the current fiscal challenges.