Viaro to take full ownership of Shell and Exxon Southern North Sea assets

Independent North Sea operator Viaro Energy will take full ownership of Shell and ExxonMobil assets in the Southern North Sea. Viaro said its main operating subsidiary RockRose Energy signed the deal with Shell UK and Exxon subsidiary Esso to take a 100% stake in 11 Shell-operated offshore assets. Viaro did not disclose the value or financial nature of the agreement.

The deal includes the Shamrock, Caravel, Corvette, Brigantine, Leman, Galleon, Skiff, Carrack Main and East, Cutter, Barque and Clipper assets. The offshore assets all tie back to the onshore Bacton Gas Processing Terminal via the Leman and Clipper fields. In 2023, production from the assets accounted for around 5% of total UK gas production and Viaro said it sees “strong growth potential” through near field exploration opportunities.

Viaro said ongoing tight gas development in the Galleon and Barque fields and “strong potential” in the Greater Sole Pit area are “indicative of the fields’ lasting importance for the UK’s energy security”. The London-based firm estimates 2P reserves of around 58 million barrels of oil equivalent (mboe), with potential to extract over 120 mboe of net 2C resources.

‘Crowning achievement’ for Viaro

Viaro Energy chief executive officer Francesco Mazzagatti said the deal is a “crowning achievement” for the company’s strategic vision in the North Sea. “We have long emphasised our commitment to the UKCS North Sea, and while we have certainly encountered more than a few challenges to realise our initial strategy, it is deals like this that make it evident why it is a worthwhile long-term investment,” Mazzagatti said.

Viaro Energy has been expanding across the North Sea with several major acquisitions in recent months. The group was given the regulatory green light to join one of the largest undeveloped oil finds in the UK North Sea. The deal saw Viaro acquire a 15% stake in the Bressay project and the EnQuest Producer FPSO in a £46m deal, marking its expansion into the Northern North Sea from its core operating grounds in the Central and Southern sector.

The firm also acquired a 100% working interest the P2593 licence in the West of Shetland through RockRose. This included the Tuck gas discovery and 50% interests in each of the Boulmer, Cherry and Sammy exploration prospects.

Shell and Exxon retreat

Larger oil companies have been retreating from the ageing North Sea basin in favour of newer and more profitable regions. The Viaro announcement comes shortly after the new Labour government confirmed the windfall tax on oil and gas firms will increase in November.

The move prompted an angry reaction from the offshore sector, amid warnings the changes will “hasten the demise” of the UKCS and send investment to Norway. Viaro had previously announced a “pause” on North Sea projects due to the ongoing political uncertainty.

If the deal is approved by regulators, it would mark Exxon’s exit from the North Sea, where it has been present since 1964, after selling most of its assets in the central and northern North Sea to Neo Energy in 2021. Chevron also looks set to exit the UK North Sea, potentially ending the company’s 55-year history in the area. Other firms tipped by analysts to depart UK waters include Apache, Dana Petroleum and China’s CNOOC. After the deal, Shell will still maintain operated assets in the Central and Northern North Sea, with new projects including the Penguins, Jackdaw and Victory developments.

Bacton Gas Terminal

Alongside the production potential of the Shell and Exxon SNS assets, Mazzagatti also highlighted the energy transition potential of the acquisition. “Shell and ExxonMobil’s Southern North Sea portfolio is not only the backbone of the UK’s energy production and security, but it also represents one of the best strategically placed solutions that have the potential to play an important role in the energy transition,” he said.

“With strong potential for wind farm synergies, electrification of upstream assets, CCS and hydrogen supply, this acquisition fits Viaro’s ongoing and planned activities across the energy sector perfectly.” Viaro said the Bacton gas terminal complex holds “immense potential” to become an energy transition hub. Viaro said the NSTA has identified Bacton as “ideally positioned” for hydrogen production, with “strong potential” for carbon capture and storage (CCS). Last year, the North Sea Transition Authority (NSTA) finalised its first carbon storage licensing round, with Shell and Esso awarded a licence connected to the Sean and Indefatigable field.

Viaro said the deal announced today does not include Shell’s carbon storage licence In addition to potential offshore wind developments, Viaro said it intends to conduct feasibility studies on decarbonising Bacton. Viaro has previously mooted decarbonising its offshore assets with miniature nuclear reactors.