The British-Dutch oil company, Shell and the Norwegian giant Equinor, have announced this Thursday the intention to unify their British assets of oil in the United Kingdom to create an independent firm that would be the largest independent producer in the entire North Sea, pumping 140,000 barrels a day thanks to the offshore projects of both. Although the firm will be independent and will be established in Aberdeen, Scotland, both will be in the capital of it (50% each). The reason why they are taking this step is that they believe that they could sustain greater production through this formula and, in this way, guarantee supply from the United Kingdom.
In the absence of specifying the terms, both firms plan to close the agreement at the end of 2025 as there are many details that must be negotiated to carry out this movement, which completely changes the business structure of the region and the entire continent. “This transaction strengthens cash flow Equinor’s short-term investment and, by combining the long-standing experience and competitive assets of Equinor and Shell, this new entity will play a crucial role in securing the UK’s energy supply,” said Philippe Mathieu, executive vice president of exploration and Equinor international production
In its statement, the Norwegian firm highlighted that the new company will include Equinor’s holdings in Mariner, Rosebank and Buzzard, and Shell’s holdings in Shearwater, Penguins, Gannet, Nelson, Pierce, Jackdaw, Victory, Clair and Schiehallion. Thus keeping all these exploitation licenses.
Equinor’s executive vice president for International Exploration and Production, Philippe Mathieu, commented that “this transaction strengthens cash flow Equinor’s short-term investment and, by combining the long-standing experience and competitive assets of Equinor and Shell, this new entity will play a crucial role in securing the UK’s energy supply.”
For her part, Zoë Yujnovich, Director of Integrated Gas and Upstream at Shell, commented: “The oil and gas produced is expected in the country play an important role in the future of the UK energy system. To achieve this in an already mature basin, we are joining forces with Equinor, a partner with whom we have collaborated for many years. “The new company will help play a vital role in a balanced energy transition, providing heat for millions of UK homes, power for industry and a secure supply of the fuels people depend on.”
The Shell executive commented that the new firm will have a great operational advantage by being able to carry out independent actions such as borrowing or, make decisions about how to classify your capital. Regarding whether this could be a move to launch this new firm on the stock market and achieve significant cash flow, SHell commented that at the moment there are no plans to embark on this path with an IPO.
The North Sea is at a time of great change with large private equity players purchasing offshore assets.the largest producers in the world and create independent groups in the region that operate on their own. This is the case, for example, with Harbor Energy. These new firms are managing to enter the market in a very competitive way in terms of costs. According to the statement, the latter is precisely what both firms are looking for: to produce more at a lower price.
The agreement “makes sense from an industrial point of view, as Europe’s two main energy companies join forces,” said Teodor Sveen Nilsen, analyst at Sparebank 1 Markets, in a note to investors after meeting. “If we assume that the operation is carried out correctly and fairly, we believe that tax synergies and possible synergies with suppliers justify a positive reaction.
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