Shell Launches New Oil and Gas Company in North Sea
18
World
December 5, 2024 11:00
amsterdam - Shell merges its UK oil and gas units with Norwegian producer Equinor to create the largest independent producer in the UK North Sea.
Shell is combining its British oil and gas assets with Norwegian company Equinor to form the leading independent producer in the UK North Sea region. The partnership aims to deliver immediate results in the fossil fuel sector, with both companies sharing equal ownership of the venture.
Having operated in the area for decades, the newly formed company is set to be established by the end of 2025 pending approval from British authorities. Shell and Equinor hold significant oil and gas reserves in the vast British territorial waters.
Equinor's board member, Philippe Mathiue, stated that by leveraging the expertise and competitive strength of both companies, the new entity will play a vital role in securing the UK's energy supply. Currently, the two companies collectively employ around 1300 people in the UK and extract nearly 140,000 barrels of oil per day.
Oil companies in the UK are facing challenges as the Labour government aims to tax a substantial portion of their profits from oil and gas reserves. Shell's new CEO, Wael Sawan, highlighted the company's focus on delivering shareholder value and maintaining oil production levels while increasing gas output to meet the demand from energy plants and chemical facilities transitioning away from coal and oil.
The North Sea oil fields, which have been exploited since the 1960s, are experiencing declining production levels. The International Energy Agency (IEA) reported a lack of necessity for developing new oil fields. Major oil companies are exploring offshore locations near Africa and Latin America, including Suriname, to discover new reserves to meet fuel demands.
In the North Sea, newcomers often backed by private equity capital, are acquiring and merging outdated platforms to optimize operations. Recently, Harbor Energy executed a similar strategy in British territory.
The new Shell and Equinor venture anticipates cost savings through efficient operations to maximize the remaining resources in the North Sea.