By Dominic Chopping


Equinor and Shell plan to merge their U.K. offshore oil-and-gas assets to form a new company focused on the U.K. North Sea.

The two energy majors will create a joint venture they say will be the biggest independent producer in the North Sea to help sustain domestic oil-and-gas production and secure energy supply in the U.K.

"The new company will be more agile, focused, cost-competitive and strategically well positioned to maximize the value of its combined portfolios on the U.K. Continental Shelf," they said in a statement.

The new company will be based in Aberdeen, and will invest to extend the life of oil-and-gas fields and platforms, they said.

The 50-50 venture will include Equinor's stake in three offshore fields and Shell's stakes in nine, as well as a range of exploration licenses. Other assets such as wind farms, terminals, storage and carbon capture assets held by the companies aren't part of the merger.

The companies said production in the mature U.K. North Sea basin is declining, so by combining their resources they can ensure continued economic production from an area expected to play a significant role in the future of the U.K.'s energy system.

"The new venture will help play a critical role in a balanced energy transition providing the heat for millions of U.K. homes, the power for industry and the secure supply of fuels people rely on," Shell's integrated gas and upstream director Zoe Yujnovich said.

Equinor currently produces around 38,000 barrels of oil equivalent a day in the U.K., with Shell producing over 100,000 barrels. The companies expect the new joint venture to produce over 140,000 barrels of oil equivalent a day in 2025.

Equinor employs around 300 people in oil-and-gas roles in the U.K., while Shell employs around 1,000.

Financial terms weren't disclosed but the joint venture will be self funded and Equinor said it will benefit from increased short-term production and cash flow while helping to reduce overall risk exposure.

Completion of the deal remains subject to approvals and is expected by the end of 2025.


Write to Dominic Chopping at dominic.chopping@wsj.com


(END) Dow Jones Newswires

12-05-24 0345ET