Shell and Equinor tie-up to create new UK oil and gas producer
In this regard, Shell and Equinor have announced their plans to merge their offshore oil and gas activities in the North Sea and create a new company that will be staffed with 1,300 employees.
It will be based in Aberdeen and will be the largest producer of oil and gas in the North Sea and is expected to produce more than 140000 BOE per day in the year 2024.
There are no layoffs as a consequence of this deal according to Shell, a company which stated that it would be able to “build” the UK oil and gas jobs.
In the UK, Equinor has 300 people working in oil and gas while Shell has 1000 people in the same position.
Zoe Yujnovich, the executive vice president of Shell’s integrated gas and upstream business commented that “Anyone who spends the majority of their time” working on Shell and Equinor’s North Sea assets for example oil rigs will be transferred to the new company.
She also pointed out that the transaction might lead to the creation of a “bigger and healthier company”.
"From an employee point of view, I think that that can really enhance diversity of career choices, but also, I would argue, longevity of their career under the new combined entity. "
British oil and gas has been on the decline for the past few decades due to the basin being largely exhausted.
As a consequence, companies such as Shell have sought for better opportunities in other areas all over the world.
As it stands, Shell’s UK production business is able to fight for its investment dollars with those fields in the global company.
The new company will also be able to seek for new sources of financing in the market, including debt, and will not be “repeatedly battling for capital” with other energy regions, as stated by Ms Yujnovich.
She also stated that this way the move will help to “maintain indigenous oil and gas production for the next several decades meeting the UK energy requirements”.
Nevertheless, she remarked that the North Sea is “still a long way from the easy oil and gas fields of the past”.
According to her, “After decades of production, of course, there is less oil and gas, and the maturity of the basin means that necessarily the remaining resources are difficult to recover. “
According to Yujnovich, “As long as there is production from the North Sea, it must meet the challenges of other energy regions and adapt to the new conditions and do so consciously. ”
The company will be a dual corporate entity of Shell and Equinor.
The agreement remains to be approved by certain regulators and is expected to be completed by the end of 2025.
Shandor Brenner is an American journalist recognized for his sharp and insightful reporting on social and political issues. His work is known for its depth, integrity, and the ability to highlight critical societal concerns.