Shell and Equinor to form UK oil and gas joint venture
COPENHAGEN/LONDON, Dec 5 (Reuters) - Shell and Norway's Equinor will merge their British offshore oil and gas assets into an equal joint venture, they announced on Thursday.
The venture, to be based in Aberdeen, Scotland, is expected to produce over 140,000 barrels of oil equivalent per day (boed), with completion of the deal expected by the end of 2025.
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"The new company will...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," Shell and Equinor said in a statement.
While the new entity would become the British North Sea's biggest independent producer, there is no intention to conduct an initial public offering, Shell Upstream Director Zoe Yujnovich told reporters.
The ageing British North Sea basin, where production started in the 1970s, has seen a steady exit of oil companies in recent decades as production declined from a peak of 4.4 million boed at the start of the millennium to around 1.3 million boed today.
The British government's decision to impose a windfall tax on North Sea producers following a surge in energy costs in 2022 has put further pressure on producers to reduce investment and exit the basin.
The North Sea Transition Authority (NSTA) regulator has forecast output will decline to fewer than 200,000 boed by 2050.
Shell UK's output stands at over 100,000 boed and Equinor currently produces some 38,000 boed per day in Britain, the companies said.
Equinor is currently developing the Rosebank oilfield, one of the last known major oil reservoirs in Britain, while Shell is developing the Jackdaw gas field.
The new company will include Equinor's stakes in the Mariner, Rosebank and Buzzard fields, and Shell's holdings in Shearwater, Penguins, Gannet, Nelson, Pierce, Jackdaw, Victory, Clair and Schiehallion, the Norwegian group said.
A range of exploration licences will also be part of the transaction, it added.
Equinor will retain ownership of the Utgard, Barnacle and Statfjord cross-border assets between Norway and Britain, as well as its offshore wind portfolio including Sheringham Shoal, Dudgeon, Hywind Scotland and Dogger Bank, it said.
It will also retain its hydrogen, carbon capture and storage, power generation, battery storage and gas storage assets, it added.
Shell will keep its interests in the Fife NGL plant, St Fergus Gas Terminal and floating wind projects under development, MarramWind and CampionWind.
Shell UK will also continue as the technical developer of Acorn, Scotland's largest carbon capture and storage project, Equinor said.
(Reporting by Louise Breusch Rasmussen, Editing by Terje Solsvik and Jacqueline Wong, Kirsten Donovan)