- Shell and Equinor have merged their North Sea assets, forming the largest independent oil producer in the UK, producing 140,000 barrels of oil equivalent per day.
- Environmental groups, such as Greenpeace, which opposes projects like the Rosebank oil field, will criticize the merger effective January 1, 2025.
- Both companies will retain control of their broader operations, with Equinor focusing on renewable energy and Shell continuing its gas and offshore wind projects.
Shell and Equinor have merged their North Sea assets, creating the region’s largest independent oil and gas producer. Based in Aberdeen, the new company will produce about 140,000 barrels of oil equivalent per day (boe/d). Both companies will equally own the entity, with the merger taking effect on January 1, 2025.
Shell contributes 100,000 boe/d, while Equinor brings 38,000 boe/d, boosting the new company’s position in the UK market. Despite the boost, the output remains small compared to the global operations of each company. Equinor alone produces nearly 2 million boe/d worldwide.
As North Sea oil fields approach depletion, Shell and Equinor seek to extract the remaining resources more efficiently while reducing costs. They aim to keep these operations profitable and strategically important for the UK. By joining forces, both companies hope to extend the life of North Sea oil production.
One key asset, the Rosebank oil and gas field, faces legal challenges and strong opposition from environmental groups. Shell and Equinor plan to explore listing the new company publicly, increasing its market exposure.
The market response reflected mixed sentiments. Equinor’s stock increased by 0.13% on the Oslo Stock Exchange, while Shell’s shares fell by nearly 1% in London. Investors seem wary of the sector’s future, particularly with the ongoing global energy transition.
Environmental groups, led by Greenpeace, immediately criticised the merger. Greenpeace accused Shell and Equinor of trying to “disguise the terminal decline” of the North Sea oil industry. The NGO renewed calls for the UK government to halt new oil exploration permits, pointing out the environmental and legal challenges tied to the Rosebank project.
Both companies will continue to manage their broader operations separately. Equinor will focus on its Norway-UK fields and maintain its renewable energy ventures, especially in offshore wind. Shell will continue operating its Fife liquefied natural gas plant, the St Fergus gas terminal, and offshore wind projects.
This merger shows the need for major oil companies to adapt to economic challenges and environmental pressures. As production from mature fields declines and costs rise, Shell and Equinor aim to remain competitive by consolidating their North Sea assets.
However, concerns remain about the long-term sustainability of this approach. The global shift toward cleaner energy demands new strategies from oil companies. While this merger may offer short-term benefits, the future of the North Sea oil industry remains uncertain as the world embraces renewable energy solutions.
Shell and Equinor’s decision underscores the complex realities of the modern energy sector. With dwindling oil reserves, growing regulatory pressures, and environmental scrutiny, the success of this venture will depend on how well it navigates the changing landscape.