The UK’s major carbon capture and storage (CCS) projects in the industrialised Teesside and Humber regions have arranged debt packages worth a combined GBP 6.7bn and are close to signing the deals within the next few weeks, sources said.

News of the debt raises emerge as the UK’s Department of Energy Security and Net Zero (DESNEZ) said on 4 October that it has pledged GBP 21.7bn over 25 years to fund projects that capture carbon and store them underground – including the ones raising the GBP 6.7bn of debt.

The debt raises are split into two parts, one led by a consortium called Northern Endurance Partnership (NEP) owned by bp, Equinor and TotalEnergies that is seeking GBP 3bn of debt to finance the construction of a carbon storage and transport pipeline covering the industrial belts on Teesside and the Humber region.

The lender group for NEP includes some 15 banks, each providing between GBP 200m and GBP 250m, the sources said.

Meanwhile, the second part, which is led by a consortium called Net Zero Teesside (NZT) that is backed by bp and Equinor, has arranged a bank group comprising 20 lenders for a debt package of about GBP 3.7bn to finance the development of two projects – an 860 MW combined cycle gas turbine power project and a carbon capture plant in the Teesside area– the sources said, without revealing the split between the two.

Among the banks which are part of the debt financing group for the NEP and NZT’s schemes include NatWest, BBVA, ANZ, Helaba and Societe Generale. Societe Generale is also the financial advisor for the debt raise for both NEP and NZT.

A number of banks are lending to both deals, which also share similar links and risks, given for example an issue with the storage pipeline will impact the carbon capture projects, sources said.

Helaba and Societe Generale declined to comment, while bp, Equinor, TotalEnergies, ANZ, NatWest and BBVA did not respond to requests for comments.

The NEP, part of the East Coast Cluster, one of the various so-called carbon capture, use and storage clusters in the UK, will collect CO2 from carbon-intensive emitters such as industries and take it to a sub-sea storage site – Endurance carbon store – in the Southern North Sea via a pipeline system originating in Teesside and another in the Humber area.

Its construction is expected to start by the end of 2025 with project commissioning by the third quarter of 2027 and first injection of CO2 by the end of 2027, according to the project’s documents.

The NEP is backed by a RAB-like mechanism in which the government will provide a minimum revenue if the carbon infrastructure faces insufficient supplies of CO2.

This March, NZT Power and the NEP picked contractors for engineering, procurement, and construction contracts with a combined value of around GBP 4bn.

Another CCUS cluster in the UK called HyNet – backed by Eni – which involves building similar carbon storage and transmission facilities in Northwest England and North Wales, has appointed Credit Agricole to advise on financing options for the offshore infrastructure part and is likely to be signed soon, the sources said.

Other CCUS projects, including the bp-backed Viking scheme on England’s east coast which will be located in the Viking area of the southern North Sea, is working with Lloyds as debt advisor and is arranging debt finance. Viking’s carbon transport and storage infrastructure will move the CO2 to a terminal in nearby Theddlethorpe on the Lincolnshire coast.

The Acorn CCS project in northeast Scotland which has backers including the oil giant Shell and carbon capture specialist Storegga, has mandated BNP Paribas to advise on financing options.