Two global energy companies with decades of experience operating in the UK North Sea, Equinor UK Ltd, a subsidiary of Equinor ASA and Shell UK Limited, a subsidiary of Shell plc will combine their UK offshore oil and gas assets to 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 security of energy supply in the UK.
On deal completion, the new independent producer will be jointly owned by Equinor (50%) and Shell (50%).
In a press release, Equinor and Shell said that “the combination of portfolios and expertise will allow continued economic recovery of this vital UK resource.”
Based in Aberdeen, the heart of the nation’s energy sector, the joint venture will 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. A range of exploration licenses will also be part of the transaction.
Following completion, the new company will be self-funded, Equinor’s ownership stake will be equity accounted, and no organic capital expenditures related to this investment will be reported by Equinor.
The transaction has economic effect on 1st January 2025. Completion of the transaction remains subject to approvals and is expected by the end of 2025.
In the UK, Equinor currently produces approximately 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 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 floating wind projects under development-MarramWind and CampionWind. Shell UK will also remain technical developer of Acorn, Scotland’s carbon capture and storage project.
