Shell and Equinor will combine UK offshore oil and gas assets to create a new company with 1,300 employees.
Based in Aberdeen, the company is expected to be the largest producer in the North Sea, producing more than 140,000 barrels of oil equivalent (BOE) per day next year.
There will be no job losses as a result of the deal, Shell said, adding that it could “increase” the longevity of UK oil and gas jobs.
Equinor of Norway employs around 300 people in the oil and gas industry in the UK, while Shell employs around 1,000 people in similar businesses. Equinor said the 50-50 joint venture would create a more “cost-competitive” way of exploiting the “one-time production basin” where “production [is] naturally declining.
The merger will include Equinor’s the vast Rosebank oil field, which sits 80 miles (130km) northwest of Shetland and, with nearly 500m barrels of oil and gas, it is the UK’s largest oilfield. Climate campaigners recently urged a Scottish court to overturn Rosebank’s drilling license, arguing it would cause “incalculable” and unfair damage to the planet.
Shell will contribute nine fields to the venture, and Equinor will add three.
Shell’s integrated gas and upstream director, Zoe Yujnovich, said “anyone who has a majority of their time” working on Shell and Equinor’s North Sea assets, such as oil rigs, would transfer to the new company.
He added that the deal could result in “a growing entity and a more successful settlement.”
“From the employee’s point of view, I think it can really increase the diversity of career choices, but also, I argue in a new combination of being the length of their career.”
He said the new company would “support domestic oil and gas production for decades into the future, contributing to the UK’s industrial needs”.
However, he added, the North Sea is “no longer the fertile basin it once was”.
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Yujnovich said: “After decades of production, of course, less oil and gas, and the maturity of the basin means that the residue is inevitably more challenging to recover.
“For production from the North Sea to remain competitive with other global energy sources, we need to continue to adapt to this changing reality and be proactive.”
The deal is subject to regulatory approval and is expected to close by the end of 2025.