New leader in the North Sea: Equinor and Shell join forces

Two major energy companies, Equinor ASA and Shell Plc, have announced the merger of their oil and gas activities in the UK North Sea. The partnership will create a new company that will become the largest independent producer in the area. The move comes at a time when the UK upstream industry is facing declining production and increasing regulatory and tax pressures.

The North Sea, historically a key area for the UK oil and gas industry, experienced its peak in the 1990s. Since then, however, production has declined, with recent discoveries being smaller and shorter-lived. The combination of Equinor $EQNR and Shell $SHEL is designed to extend the life of existing fields and optimise investment in a region that is no longer a priority for global energy giants.

One of the reasons for the outflow of investment is the introduction of an emergency windfall profits tax in 2022, which was tightened this year by the new Labour government. The move has led to sharp criticism from the industry,…