Shell and Equinor are combining their UK oil and gas assets in a joint venture that will become the country’s largest independent producer.
Last month, the UK government increased a “windfall” tax – initially introduced in 2022 following an energy price spike after the Ukraine war. The hike brings the headline tax on the sector to 78%, which is among the highest in the world. Splicing the two together, therefore, helps mitigate these risks by creating a bigger, more efficient group. Shell brings in more cash via its bigger, more mature UK portfolio while Equinor brings a tax benefit, reported Reuters.
Equinor said the joint venture would include its equity interests in Mariner, Rosebank and Buzzard, and Shell’s equity interests in Shearwater, Penguins, Gannet, Nelson, Pierce, Jackdaw, Victory, Clair and Schiehallion.
Equinor’s executive vice president for exploration and production international, Philippe Mathieu, said: “Equinor has been a reliable energy partner to the UK for over 40 years, providing oil and gas, developing the offshore wind industry, and advancing decarbonisation. This new entity will play a crucial role in securing the UK’s energy supply.”
Climate lawyer Tessa Khan, executive director of Uplift – which supports the transition away from oil and gas – said to the BBC: “This consolidation is because the North Sea is in decline and it is now eye-wateringly expensive to get what’s left of the oil out of the basin.”
Separately, BP has agreed a deal worth up to £4.5bn to build offshore windfarms with Japan’s biggest power producer. The Guardian reported that this shift will allow it to gain some access to zero-carbon wind energy while focusing on fossil fuels.
Shell stepping back from new offshore wind investment
Shell also confirmed it won’t lead the way on any new offshore wind projects in the future, in the oil & gas major’s clearest signal yet that it is cooling to the sector. The UK-based group said in a statement sent to Recharge: “We will be focusing on maximising the value of our existing renewable generation platforms.
CEO Wael Sawan has previously announced he intends for the oil and gas producer to focus on activities with the highest returns, which, in many cases, has meant reducing spending on low-carbon and renewable businesses and increasing the focus on oil, gas and biofuels.