Fusion in the North Sea: Shell and Equinor plan joint venture

  • Shell and Equinor plan a joint venture in the British North Sea.
  • The joint venture aims at cost reductions and increased production.

Eulerpool News·

The energy giants Shell and Equinor have announced plans to combine their activities in the British North Sea to create the largest oil and gas company in the aging region. The planned 50-50 joint venture will be based in Aberdeen, Scotland, and will pool the resources and expenditures of both companies. The aim is to increase the profitability of existing facilities through cost reductions. Equinor will contribute significant tax benefits, while Shell's broader production base in oil and gas extraction will enable the joint venture to achieve higher cash flows. This is particularly significant with regard to the development of new fields, such as the substantial Rosebank oil project. Philippe Mathieu, head of Equinor’s international oil and gas production, expects the combined production to increase to 200,000 to 220,000 barrels of oil equivalent per day within the next five years. By comparison, production is expected to be over 140,000 barrels in 2025. The merger is expected to be completed by the end of 2025. Currently, Harbour Energy is the leading producer in the region with a production volume of 149,000 barrels of oil equivalent per day. Shell, a pioneer of North Sea production and known for the Brent oil field, does not plan an IPO for the new joint venture. Over the past decades, many oil companies have gradually withdrawn from the British North Sea as production has declined from a peak of 4.4 million barrels of oil equivalent per day at the beginning of the millennium to around 1.3 million barrels. Increased energy prices and the associated tax burdens imposed by the UK government have accelerated this trend. Equinor currently holds a significant stake in the Rosebank oil field development, while Shell is involved in the development of the Jackdaw gas field. Other companies, such as Eni and Ithaca Energy, as well as Aker BP in Norway, have carried out similar mergers in the North Sea in recent years.
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