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 incorporate Equinor’s holdings in the Mariner, Rosebank and Buzzard fields, along with 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 close by the end of the year. Shell and Equinor’s UK-based oil and gas workforce of 1,300 will transition to the new entity.
Shell, based 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. Founded in 1972 as the Norwegian State Oil Company (Statoil), it was created to manage the country’s growing oil resources following major offshore discoveries in the late 1960s.
Strategic and economic reason
The venture allows Shell and Equinor to exploit tax synergies and offset losses in a challenging regulatory landscape. Recent windfall taxes and declining North Sea production have spurred consolidation efforts among energy majors. Analysts suggest the deal aligns with similar collaborations in Norway and other mature basins.
Shell’s Integrated Gas and Upstream director, Zoë Yujnovich, said: “This new venture will play a vital role in a balanced energy transition, providing heat to millions of UK homes and ensuring fuel supplies.”
Equinor’s Executive Vice President for International Exploration and Production, Philippe Mathieu, highlighted the benefits of combining expertise: “This transaction strengthens Equinor’s near-term cash flow and secures a reliable energy supply for the UK .”
Environmental groups, including Greenpeace, have raised concerns about projects such as Rosebank and Jackdaw due to their impact on emissions, but the companies argue that the venture supports the UK’s energy needs as it transitions to renewable energy.