Chevron, the energy giant, has announced its decision to exit its operations in the North Sea, potentially ending over five decades of oil and gas production in the area. The company confirmed on Thursday that it would be offering its remaining assets in the North Sea for sale, including its interest in the Clair field, the largest in the British sector of the North Sea. This move comes after Chevron had already ended its exploration and production in the North Sea in 2019. The potential sale signifies a significant chapter in the history of hydrocarbon production in the basin.
The assets being marketed by Chevron in the U.K. North Sea also include working interests in the Sullom Voe Terminal operated by EnQuest, as well as the Ninian and SIRGE pipelines. Chevron’s decision to exit the North Sea is part of a strategic review aimed at maintaining capital discipline in both traditional and new energies. The company joins other oil majors such as ExxonMobil, BP, and Shell in favoring newer, more cost-effective oil and gas fields globally. The U.K.’s punishing taxation regime, with energy companies currently paying 75% tax on profits, alongside proposed tax rate increases by the opposition Labour Party, may impact the ultimate sale price of Chevron’s assets in the North Sea.
The potential sale of Chevron’s North Sea assets may still yield between $900 million to $1.1 billion. Chevron had previously announced plans to sell between $10 billion and $15 billion worth of asset holdings as part of its proposed $53 billion acquisition of Hess. However, this acquisition is currently being delayed due to a legal dispute with ExxonMobil over assets in Guyana. Despite the exit from the North Sea, Chevron has confirmed that the potential sale will not impact its other operations in the U.K., including its international headquarters in London and a research, training, and technology center in Aberdeen.
Chevron’s decision to exit the North Sea follows a trend of oil majors shifting away from the region in favor of newer and more cost-effective oil and gas fields globally. The company’s move comes in the midst of a challenging taxation environment in the U.K., with energy companies currently facing a 75% tax rate on profits, and potential future increases in total tax rates and removal of tax relief on new projects. Industry sources suggest that despite these challenges, the sale of Chevron’s North Sea assets could still fetch a substantial sum.
The potential sale of Chevron’s remaining North Sea assets signals the end of a major chapter in the basin’s hydrocarbon production history as the company joins other oil majors in exiting the North Sea in pursuit of more competitive opportunities globally. As Chevron moves to divest its assets in the region, the impact of the U.K.’s taxation regime and potential political changes on the ultimate sale price remains uncertain. However, Chevron’s strategic review and focus on maintaining capital discipline in both traditional and new energies are driving its decision to exit the North Sea and reallocate resources to more competitive ventures.
