The UK subsidiaries of energy majors Equinor and Shell will combine their offshore oil and gas assets and form a new company which will be the UK North Sea’s biggest independent producer.
The incorporated joint venture will be set up to sustain domestic oil and gas production and the security of energy supply in the UK. On deal completion, the new independent producer will be owned 50-50 by Equinor and Shell.
According to the two companies, the combination of portfolios and expertise will allow continued economic recovery of this vital UK resource in a maturing basin where production is naturally declining.
Based in Aberdeen, the JV will include Equinor’s equity interests in Mariner, Rosebank, and Buzzard as well as Shell’s equity interests in Shearwater, Penguins, Gannet, Nelson, Pierce, Jackdaw, Victory, Clair, and Schiehallion. A range of exploration licenses will also be part of the transaction.
In the UK, Equinor currently produces around 38,000 barrels of oil equivalent per day while Shell UK produces over 100,000 barrels of oil equivalent per day. The new company is expected to produce over 140,000 barrels of oil equivalent per day in 2025. Equinor employs around 300 people in oil and gas roles in the UK, while Shell employs approximately 1,000 in similar oil and gas positions across the country.
“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,” said Philippe Mathieu, Equinor’s EVP for international exploration and production.
“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,” added Zoë Yujnovich, Shell’s integrated gas and upstream director.
The transaction has an economic effect on January 1, 2025. Completion of the transaction remains subject to approvals and is expected by the end of 2025.
Equinor will retain 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 the MarramWind and CampionWind floating wind projects. Shell UK will also remain the technical developer of the Acorn CCS project.
