Offshore oil rig in the North Sea
Energy giant Chevron
Confirming the move on Thursday (May 16, 2024), the company said it would offer up its remaining assets in the North Sea. However, the process may take "multiple months" and "may or may not result in a sale", it added.
The assets on offer include Chevron's 19.4% non-operated working interest in the Clair field, the largest in the British sector of the North Sea. The field is currently operated by BP and produces 120,000 barrels per day.
Associated U.K. North Sea assets being marketed by Chevron also include various working interests in the Sullom Voe Terminal operated by EnQuest, as well as the Ninian and SIRGE pipelines.
Prior to its latest decision, Chevron had already ended its own North Sea exploration and production back in 2019 - as part of an earlier divestment drive - after selling its drilling assets to Ithaca Energy and Equinor.
The U.S. supermajor was among the first oil and gas companies to drill in the North Sea in the 1960s. Should the latest sale go through, it would signal the end of a major chapter in the basin's hydrocarbon production history.
However, Chevron confirmed the potential sale will not have any impact on its other operations in the U.K. These include its international headquarters in London and a research, training and technology center in Aberdeen.
Why now?
In a statement explaining the move, the energy major put the decision down to a strategic review, and noted: "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."
It makes Chevron the latest oil major to exit the North Sea in favor of newer, more cost effective oil and gas fields around the world. Rival ExxonMobil
Chevron's decision also comes in the wake of a punishing taxation regime in the U.K., instituted after an energy price spike that followed Russia's invasion of Ukraine in 2022. Under current tax legislation, energy companies pay 75% tax on profits.
And in an election year, with the U.K. expected to go to the polls before January 2025, the opposition Labour Party is promising to raise the total tax rate to 78% as well as remove tax relief on new projects.
Such a wider setting may have an impact on the ultimate sale price of Chevron's remaining North Sea assets. Industry sources suggest the sale may still net it somewhere in the region of $900 million to $1.1 billion.
Chevron has already said it would sell between $10 billion and $15 billion worth of asset holdings as part of its proposed $53 billion acquisition of Hess. However, it is currently being held up due to a legal battle with ExxonMobil over assets in Guyana.
