Shell and ExxonMobil downsize North Sea portfolio enabling British firm to snap up giant gas-producing assets in UK

London-based independent upstream player Viaro Energy, through its main operating subsidiary RockRose Energy, is expanding its gas footprint by taking over a 100% working interest in the UK Southern North Sea assets from Shell U.K. and Esso Exploration and Production UK, owned by two supermajors, the UK-based Shell and the U.S.-headquartered ExxonMobil.

Thanks to this deal, Viaro Energy will acquire a full ownership interest from Shell and ExxonMobil in the Shell-operated UK Southern North Sea assets, which are said to be one of the largest and longest-producing gas asset portfolios on the UK Continental Shelf (UKCS), including production facilities and the Bacton gas receiving terminal.

Therefore, the London-based player’s portfolio will be expanded with 11 operated offshore assets and one exploration field: Shamrock; Caravel; Corvette; Brigantine; Leman; Galleon; Skiff; Carrack Main, Cutter, Carrack East; Barque; and Clipper – all tied back to the Shell-operated onshore Bacton gas processing terminal via the Leman and Clipper fields. 

These natural gas fields of the Southern North Sea and the Bacton gas terminal have been part of the UK’s energy foundation for 56 years. The tight gas development ongoing in the Galleon and Barque fields and the potential for tight gas opportunities and near-field exploration already identified in the Greater Sole Pit area are perceived to be indicative of the fields’ lasting importance for Britain’s energy security.

The production from these assets was around 28,000 boepd in 2023, or around 5% of the UK’s total gas production. With access to producing operated fields and what is described as significant growth potential through near-field exploration opportunities identified, the acquisition will more than double Viaro’s producing portfolio and reaffirm the firm’s long-term commitment to the UK North Sea.

Francesco Mazzagatti, CEO of Viaro Energy, commented: “We are immensely grateful to the Shell and ExxonMobil teams for an exemplary collaboration on this major deal, which represents a crowning achievement of Viaro’s strategic vision in the North Sea to date.

“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.”

Furthermore, the London-based firm estimates the 2P volumes of the assets it will bring into its fold at 58 million barrels of oil equivalent (boe), with a projected potential to extract over 120 million boe of net 2C resources. The company plans to maximize the economic return of these assets to boost low-emission gas production in the area by pursuing a redevelopment with existing infrastructure.

The Bacton gas processing terminal, which provides a direct route for natural gas produced from the Southern and Central North Sea to the UK National Transmission system and enables gas to flow between the UK and the Netherlands, has received a rejuvenation investment of around £300 million over the years to upgrade and extend the life of the terminal for future use.

Moreover, Bacton gas, which generates around 40% of Britain’s electricity, constitutes the main supply of gas for East Anglia and North London’s homes and businesses, whose terminal optimization potential has been recognized by the North Sea Transition Authority (NSTA). This gas terminal complex also holds the potential to become an energy transition hub.

The NSTA’s analysis shows that the Bacton terminal is well positioned to become a significant hydrogen production site for London and the Southeast, with strong potential to play a role in carbon capture and (CCS) alongside offshore wind developments that can supply renewable power to Bacton. With this at the forefront, Viaro intends to conduct feasibility studies on the best ways to decarbonize the asset by deploying clean technology.

Mazzagatti underscored: “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.

“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.”

Upon completion, the acquisition will mark Viaro’s transition to an operatorship role, with the full ownership of the Bacton gas processing terminal bringing the firm opportunities to play an important role in the energy transition. The deal with the two oil majors comes months after the firm set the stage to throw low-carbon nuclear technology into its oil and gas decarbonization mix.

Shell and ExxonMobil are also parting with their Dutch North Sea assets, held by their 50/50 joint venture (JV), Nederlandse Aardolie Maatschappij (NAM), following a deal with Canada’s Tenaz Energy.