BAKU, Azerbaijan, February 4. The pace of upstream mergers and acquisitions (M&A) is expected to decline sharply in 2025 after two years of record-breaking transactions, largely driven by US shale consolidation, according to Rystad Energy, an independent research and energy intelligence company based in Norway, Trend reports.
The global deal pipeline is valued at approximately $150 billion, but a return to recent transaction peaks appears unlikely as consolidation nears completion. Geopolitical tensions in the Middle East, the ongoing war in Ukraine, and fiscal challenges in the UK are also expected to weigh on deal activity.
North America remains the dominant M&A hub, with nearly $80 billion in upstream opportunities. South America also saw a surge in deal value, rising from $3.6 billion in 2023 to $14.1 billion in 2024, despite Petrobras pausing its divestment program.
The Middle East is emerging as a key M&A center, driven by liquefied natural gas (LNG) expansion projects. Deal value in the region reached $9.65 billion in 2024, fueled by major initiatives such as QatarEnergy’s North Field expansion and ADNOC’s Ruwais LNG project. However, regional geopolitical risks may impact future transactions.
In Europe, M&A activity dropped by 10% year-on-year to $14 billion in 2024, with the UK accounting for 75% of the region’s deals. The most significant transaction involved Shell and Equinor merging their UK North Sea portfolios, creating the region’s largest producer with a projected output of 140,000 barrels of oil equivalent per day by 2025. The future of M&A in the region remains uncertain due to the UK’s fiscal policies, which could deter investment.
While M&A activity is expected to slow overall, opportunities remain, particularly in North America and the Middle East, with potential upside in US shale gas if market conditions remain favorable.