Chevron prepares for North Sea exit after more than 55 years

Chevron (CVX.N) said it is set to launch the sale of its remaining UK North Sea oil and gas assets, in a move that would mark the US energy giant’s exit from the ageing basin after more than 55 years.

The planned divestment, confirmed to Reuters on Thursday, comes as Chevron prepares for the $53 billion acquisition of rival Hess which it previously said will include $10 billion to $15 billion in asset sales around the world.

The exit will be the latest step in a steady retreat of top oil and gas companies from the declining British basin which pioneered deepwater production in the 1970s, as they focus on newer assets around the world.

Chevron’s assets include a 19.4 per cent stake in the BP-operated (BP.L) Clair oilfield in the West of Shetland region, the largest in the British North Sea with production of 120,000 barrels per day.

BP has said it is considering a third development phase for the field, known as Clair South, which is one of the largest remaining untapped fields in the North Sea.

UK oil and gas production has dropped from a peak of around 4.5 million barrels of oil equivalent per day (boed) in the late 1990s to around 1.2 million boed in 2023.

Chevron is also seeking to sell its marginal interests in the Sullom Voe oil terminal, as well as its stakes in the Ninian and SIRGE pipeline systems which are both linked to the hub, it said in a statement.

The sale could raise up to $1 billion excluding tax benefits, one industry source said. The process is expected to be formally launched in June, industry sources told Reuters.

It will not impact the operations of Chevron’s international headquarters in London or its technology centre in Aberdeen, the company said.

The exit follows a review of Chevron’s global portfolio as CEO Mike Wirth seeks to focus on the firm’s most profitable assets, Chevron said.

In 2018, Chevron sold its stake in the Rosebank field development to Equinor. A year later it sold many of its North Sea assets to Ithaca Energy (ITH.L). Other major oil companies, including Exxon Mobil (XOM.N), ConocoPhillips (COP.N) and Shell, have sold assets in the basin since the 2000s.

“Chevron continues the trend that has seen the North American majors seek to exit the UK,” David Moseley, analyst at consultancy Welligence said. Potential acquirers for Chevron’s assets include independents looking to grow, he added.

Chevron has said it would sell up to $15 billion in assets as part of its planned acquisition of Hess, which has hit a stumbling block due to a legal conflict with rival Exxon over assets in Guyana.

It said the North Sea sale process is not related to a 35 per cent windfall tax the British government imposed on North Sea producers following the surge in energy prices in 2022.

“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 said.

The process is expected to take months, it added.