Equinor UK Ltd, a subsidiary of Equinor ASA (OSE: EQNR, NYSE: EQNR, “Equinor”), and Shell U.K. Limited, a subsidiary of Shell plc (LSE: SHEL, NYSE: ADR SHEL, AMS EURONEXT: SHELL, “Shell”), would combine their UK offshore oil and gas assets and expertise to form a new company which will be the UK North Sea’s biggest independent producer. The incorporated joint venture (IJV) will be set up to sustain domestic oil and gas production and security of energy supply in the United Kingdom, a Shell news alert of early December posted to Energy Window International said.
The new independent producer, upon completion of the deal, would be jointly owned by this “two leading global energy companies with decades of experience operating in the UK North Sea”, on the 50/50 pro-rata basis. The statement further established that with the once prolific basin now maturing and production naturally declining, the combination of portfolios and expertise would allow continued economic recovery of this vital UK resource. “The new company will be more agile, focused, cost-competitive, and strategically well positioned to maximize the value of its combined portfolios on the UK Continental Shelf.
“It will invest to provide a long-term sustainable future for individual oil and gas fields and platforms, helping extend the life of this crucial sector for the benefit of the UK.”
Based in Aberdeen, the heart of the nation’s energy sector, the joint venture is expected to include Equinor’s equity interests in Mariner, Rosebank and Buzzard; and Shell’s equity interests in Shearwater, Penguins, Gannet, Nelson, Pierce, Jackdaw, Victory, Clair and Schiehallion, with a range of exploration licenses which will also serve as part of the transaction, statement has revealed.
Both Shell and Equinor say they are proud to continue the development of the North Sea as investing partners rather than individual operators, opening a new chapter which will, according to them, help keep their status as one major and significant player in the UK energy sector.
Equinor’s Executive Vice President for Exploration and Production International, Philippe Mathieu, said: “Equinor has been a reliable energy partner to the UK for over 40 years, providing oil and gas, developing the offshore wind industry, and advancing decarbonisation. This transaction strengthens Equinor’s near-term cash flow, and by combining Equinor’s and Shell’s long-standing expertise and competitive assets, this new entity will play a crucial role in securing the UK’s energy supply.”
Shell plc’s Integrated Gas and Upstream Director, Zoë Yujnovich, commented: “Domestically produced oil and gas is expected to have a significant role to play in the future of the UK’s energy system. To achieve this in an already mature basin, we are combining forces with Equinor, a partner of many years. The new venture will help play a critical role in a balanced energy transition providing the heat for millions of UK homes, the power for industry and the secure supply of fuels people rely on.”
Completion of the transaction remains subject of approvals, with hope that by the end of 2025, it would have been concluded.
Equinor is currently producing approximately 38,000 barrels of oil equivalent per day, while Shell UK is producing over 100,000 barrels of oil equivalent per day. The new IJV is expected to produce over 140,000 barrels of oil equivalent per day in 2025.
Equinor the statement added, would be retaining ownership of its cross-border assets, Utgard, Barnacle and Statfjord and offshore wind portfolio including Sheringham Shoal, Dudgeon, Hywind Scotland and Dogger Bank. It will also retain the hydrogen, carbon capture and storage, power generation, battery storage and gas storage assets.
Shell UK will retain ownership of its interests in the Fife NGL plant, St Fergus Gas Terminal and floating wind projects under development – MarramWind and CampionWind. Shell UK will also remain Technical Developer of Acorn, Scotland’s largest carbon capture and storage project.