Equinor UK Ltd, a subsidiary of Equinor ASA, and Shell U.K. Limited, a subsidiary of Shell plc, said they “are to combine their U.K. offshore oil and gas assets and expertise to form a new company, which will be the U.K. North Sea’s biggest independent producer. The incorporated joint venture (IJV) will be set up to sustain domestic oil and gas production and security of energy supply in the U.K.,” according to a press release.

Upon deal completion, the new independent producer will be jointly owned by Equinor (50%) and Shell U.K. (50%). With the “once prolific basin now maturing and production naturally declining, the combination of portfolios and expertise will allow continued economic recovery of this vital U.K. resource,” Shell U.K. said. The new company will “be more agile, focused, cost-competitive and strategically well positioned to maximize the value of its combined portfolios on the U.K. Continental Shelf.”

Shell U.K. said the new company will invest to provide a long-term sustainable future for individual oil and gas fields and platforms, helping extend the life of this crucial sector for the benefit of the U.K.

Both Shell U.K. and Equinor “are proud to continue the development of the North Sea as investing partners rather than individual operators, opening a new chapter in which they will remain significant players in the U.K. energy sector.”

Equinor’s Executive Vice President for Exploration and Production International, Philippe Mathieu, said: “This transaction strengthens Equinor’s near-term cash flow, and by combining Equinor’s and Shell’s long-standing expertise and competitive assets, this new entity will play a crucial role in securing the U.K.’s energy supply.”

Shell plc’s Integrated Gas and Upstream Director, Zoë Yujnovich, commented: “Domestically produced oil and gas is expected to have a significant role to play in the future of the U.K.’s energy system. To achieve this in an already mature basin, we are combining forces with Equinor, a partner of many years. The new venture will help play a critical role in a balanced energy transition providing the heat for millions of U.K. homes, the power for industry and the secure supply of fuels people rely on.”

Completion of the transaction remains subject to approvals and is expected by the end of 2025.