Shell and Equinor combination creates a new UK superpower, says Wood Mackenzie

Addressing the announcement of Equinor and Shell combining UK offshore oil and gas assets in a newly incorporated joint venture, Gail Anderson, research director at Wood Mackenzie said, “This new venture will create the biggest producer on the UKCS and demonstrates the long-term attractiveness of the region.”

According to Wood Mackenzie analysis, the new 50/50 venture will:

• Deliver production of nearly 150 kboe/d in 2025, well ahead of the second largest, Harbour Energy, at 130 kboe/d. 
• Drive 2030 production to 220 kboe/d, eclipsing the second largest producer in 2030, Ithaca Energy, by over 100 kboe/d.

“This creates a new UK superpower,” said Anderson. “West of Shetland is a key growth area for the IJV, through the Rosebank, Clair and Victory fields. There is also the potential for future fields, as both companies acquired exploration acreage West of Shetland in the 33rd licensing round.”

Anderson noted that Equinor brings a sizeable tax loss position into the IJV, which combined with Shell's portfolio will realise additional value.

“The deal has come following a time of unprecedented fiscal volatility in the UK with multiple changes to the Energy Profits Levy since 2022,” said Anderson. “A consultation will begin in 2025 on a successor to the EPL post-2030. Despite these ongoing risks, it is clear the UK is still attractive for some companies, and this deal will provide greater certainty for long-term investment on the UKCS.”