Shell buys Europe’s biggest RNG producer

Shell Petroleum NV is buying Nature Energy Biogas for nearly US$2 billion

The wholly owned subsidiary of Shell plc, has reached an agreement with Davidson Kempner Capital Management LP, Pioneer Point Partners and Sampension to acquire 100% per cent of Nature Energy Biogas.

Based in Denmark, Nature Energy is the largest producer of renewable natural gas (RNG) from agricultural, industrial, and household wastes in Europe.

Nature Energy was founded in 1979 as a natural gas distributor. The company established its first biogas plant in Denmark in 2015 and now has 14 operating plants with associated infrastructure, feedstock arrangements, and current 2022 production of around 6.5 mln MMBtu/yr.

The company also has a pipeline of around 30 new plant projects in Europe and North America. More than a third of these projects are in medium to late development stage in Denmark, the Netherlands and France and could deliver up to 9.2 mln MMBtu/yr by 2030, subject to future final investment decisions and relevant regulatory approvals.

Shell will acquire Nature Energy’s portfolio of operating plants, associated feedstock supply and infrastructure, its pipeline of growth projects and its in-house expertise in the design, construction, and operation of RNG plant technology.

Nature Energy and its 420 employees located in Europe and North America will operate as a wholly owned subsidiary of Shell, initially under its existing brand.

Shell said the acquisition will accelerate its transition to net-zero emissions. It will also support the company’s ambition to grow its low carbon fuels production and customer offering.

“Shell’s competitiveness in low carbon fuels derives from capabilities across the value chain, combining a world-class Trading and Supply organization with access to differentiated technology and production assets,” said Huibert Vigeveno, Shell’s downstream director.

“Acquiring Nature Energy will add a European production platform and growth pipeline to Shell’s existing RNG projects in the United States. We will use this acquisition to build an integrated RNG value chain at global scale, at a time when energy transition policies and customer preferences are signalling strong growth in demand in the years ahead.”

The transaction is subject to regulatory approvals and is expected to close in Q1 2023. Nature Energy is cash generative, and the acquisition is expected to be both accretive to Shell’s earnings from completion and deliver double digit returns.