Equinor Re-enters UK Rosebank
Equinor has signed an agreement to acquire Chevron’s 40% operated interest in the Rosebank oil and gas field, one of the largest undeveloped fields on the UK Continental Shelf (UKCS), the Norwegian state company said October 1. The deal will strengthen Equinor’s UK portfolio, which includes the Mariner oil development and attractive exploration opportunities.
Offshore lobby group Oil & Gas UK said the announcement was "significant" and would further boost investor confidence in the potential of the basin. The Rosebank project is one of the largest known pre-final investment decision developments in the UK Continental Shelf. "Equinor’s track record of successfully developing complex and challenging fields means they are well matched to maximise economic recovery from Rosebank," said OGUK CEO Deirdre Michie.
Equinor's UK country manager Al Cook said the company's re-entry into Rosebank "demonstrated its strategy of creating value through oil price cycles. The acquisition of Rosebank complements our portfolio of oil, gas and wind assets in this country, in line with our strategy as a broad energy company."
Statoil, as Equinor then was, sold its stake to OMV in 2013, shortly before the oil price collapse; OMV subsequently wrote down the asset value when it sold its UK assets to Siccar Point in late 2016.
The Rosebank field was discovered in 2004 and lies about 130 km northwest of the Shetland Islands in about 1,110 metres of water. The other partners in the field are Suncor Energy (40%) and Siccar Point Energy (20%). Chevron's website says that the selected design calls for a subsea development tied back to a floating production, storage and offloading vessel, with natural gas exported via pipeline. The reserves are some 300mn barrels of oil equivalent.
The transaction, whose value is confidential, is subject to customary conditions, including partner and authority approval, with completion targeted as soon as possible.
Consultancy Wood Mackenzie said that selling its stake to Equinor could spell the end for Chevron in the UK and Europe. It has already moved on from Norway and Denmark, and is looking to offload its UK North Sea assets. “If all the sales go through, it would leave Clair as its only UK asset – the 19.42% stake is valuable but may not be enough for Chevron to retain a UK presence.”
He said: “High development costs have blighted Rosebank over the years. The field lies is in more than 1,000 metres of water, so it will be expensive to develop. However, we believe Equinor sees an opportunity to re-scope the project and reduce costs. It has done similar work on Norway’s Johan Castberg."