With nearly 140,000 barrels of oil equivalent per day, the new entity created by the two hydrocarbon heavyweights will be the largest independent producer in the British North Sea, they say. The operation reflects the decline of the British offshore oil and gas industry.
Norwegian Equinor and British Shell will combine their offshore oil and gas assets held in British waters of the North Sea to form a new company, which will be domiciled in Aberdeen in Scotland.
« By combining the long-standing expertise and competitive assets of Equinor and Shell, this new entity will play a crucial role in securing the UK's energy supply », justified Philippe Mathieu, executive vice-president of Equinor in charge of international exploration and production. “ The new company will be the largest independent producer, indicates the joint press release. A defensive operation which reflects the decline of the British offshore oil and gas industry, which began in the 1960s. Profitability is poor in the United Kingdom. Margins are slim and taxes high.
140,000 barrels of oil equivalent
In recent years, the trend in the North Sea has been to see new entrants, often backed by private investment funds, buying up aging assets from larger producers and merging them into so-called independent producers, such as Harbor Energy.
The two hydrocarbon heavyweights currently employ around 1,300 people in the UK's upstream oil and gas sector and pump almost 140,000 barrels of oil equivalent per day (38,000 produced by Equinor's UK subsidiary and 100 000 by Shell).
Asset distribution
Despite the gap between the respective productions, the merger will not result in any cash disbursement from Equinor, indicated a spokesperson for the Norwegian group. The Norwegian major will retain its own hands on its cross-border deposits (Norway-United Kingdom) in the North Sea as well as its assets in offshore wind power and other renewable energies. Shell, for its part, will retain ownership of its liquefied natural gas plant in Fife, the St Fergus gas terminal in Scotland and offshore wind projects under development.
The transaction, which must still be subject to regulatory approval, could be finalized by the end of 2025.
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