Equinor, Shell combine UK offshore assets to lead North Sea production

Equinor ASA and Shell Plc have announced plans to combine their UK offshore oil and gas assets into a new company, set to become the largest independent producer in the UK North Sea.

The incorporated joint venture will be set up to “sustain domestic oil and gas production and security of energy supply in the UK,” the companies said on Thursday in a statement, News.Az reports, citing Bloomberg.

The new producer will be jointly owned by Equinor and Shell, which both have decades of experience operating in the North Sea.

The deal reflects the declining status of the UK’s offshore oil and gas industry, which first got going in the 1960s and peaked about 20 years ago. As production from existing fields dwindles and the average size of new discoveries shrinks, the global majors have been shifting their focus to more attractive investment opportunities elsewhere.

The trend in the North Sea in recent years has been for new entrants, often backed by private equity, to buy up aging assets from larger producers and combine them into so-called independent producers such as Harbour Energy Plc.

Shell and Equinor’s new company will be more focused and cost-competitive, making it better able to maximize the values of its remaining North Sea resources, according to the statement. The two companies currently employ about 1,300 people in upstream oil and gas roles the UK and pump almost 140,000 barrels a of equivalent.

“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,” Equinor’s Executive Vice President for Exploration and Production International Philippe Mathieu said in the statement.

The transaction is subject to regulatory approval and is expected to close by the end of 2025.

News.Az