Chevron reportedly set for UK North Sea exit after 55 years

May 17, 2024 ExxonMobil, News, Oil & Gas

Kaieteur News – Chevron is set to commence the sale of its remaining UK North Sea assets, which will mark the US energy giant’s departure from the basin after more than five decades, reported Reuters.

The planned divestment is part of Chevron’s strategy to refocus its portfolio and follows the company’s $53bn deal to acquire Hess.

Previously, Chevron said that Hess’ acquisition, which has hit a roadblock, includes a global asset sale programme valued between $10bn and $15bn. Chevron’s decision to exit the UK North Sea is part of a broader trend among leading oil and gas companies, which are gradually withdrawing from the mature British basin to concentrate on more recent global discoveries.

Its holdings in the region include a 19.4% interest in the BP-operated Clair oilfield, the largest in the British North Sea, which currently produces 120,000 barrels per day. BP is contemplating a third development phase for the Clair field, dubbed Clair South, which remains one of the most significant undeveloped fields in the North Sea. Oil and gas production in the UK has seen a decline from its late 1990s peak of approximately 4.5 million barrels of oil equivalent per day (mboe/d) to around 1.2mboe/d in 2023.

Additionally, Chevron is looking to divest its smaller stakes in the Sullom Voe oil terminal and the associated Ninian and SIRGE pipeline systems. Industry sources suggest the sale could potentially fetch up to $1bn, excluding tax advantages. The formal sale process is anticipated to launch in June this year, the sources added. This move follows Chevron’s review of its global asset portfolio, with CEO Mike Wirth focusing on the company’s most lucrative assets.

In 2019, Chevron divested many of its North Sea holdings to Ithaca Energy, echoing similar actions by ExxonMobil and Shell over the past decade. Chevron has clarified that the North Sea sale is not influenced by the UK Government’s 35% windfall tax imposed on North Sea producers after the spike in energy prices in 2022. “As part of Chevron’s focus on maintaining capital discipline in both traditional and new energies, we regularly review our global portfolio to assess whether assets are strategic and competitive for future capital,” the company was quoted as saying. (Offshore Technology)