Shell (LSE: SHEL) and Equinor (OSE: EQNR) have announced plans to combine their North Sea oil and gas assets into a new company, set to become one of the region’s largest producers. The joint venture will be based in Aberdeen.
The 50-50 partnership will integrate Equinor’s interests in the Mariner, Rosebank and Buzzard fields, alongside Shell’s interests in Shearwater, Penguins, Jackdaw and other fields. The combined company is expected to produce more than 140,000 barrels of oil equivalent per day by 2025.
The transaction, effective January 1, 2025, is subject to regulatory approvals and is expected to be completed by the end of the year. Shell and Equinor’s 1,300 UK-based oil and gas employees will transfer to the new entity.
Shell, headquartered in London, is one of the world’s largest energy companies, known for its extensive oil and gas operations and growing investments in renewable energy.
Equinor, formerly known as Statoil, is a Norwegian state-owned multinational energy company headquartered in Stavanger. Established in 1972 as the Norwegian State Oil Company (Statoil), it was created to manage the country’s burgeoning oil resources following major offshore discoveries in the late 1960s.
Strategic and economic justification
This venture allows Shell and Equinor to take advantage of tax synergies and offset losses in a challenging regulatory environment. Recent windfall taxes and declining North Sea production have spurred consolidation efforts among major energy companies. Analysts suggest the deal aligns with similar collaborations in Norway and other mature basins.
Zoë Yujnovich, Shell’s integrated director of gas and upstream, said: “This new business will play a vital role in a balanced energy transition, providing heat to millions of UK homes and securing the supply of electricity. fuel.
Philippe Mathieu, Equinor’s Executive Vice President for International Exploration and Production, highlighted the benefits of combining expertise: “This transaction strengthens Equinor’s short-term cash flow and ensures reliable energy supply for the United Kingdom. »
Environmental groups including Greenpeace have raised concerns about projects like Rosebank and Jackdaw due to their impact on emissions, but the companies maintain the project meets the UK’s energy needs during the transition to renewable energy.
