Energy giant Chevron has announced its decision to exit its operations in the North Sea after more than five decades of oil and gas production in the region. The company confirmed that it would be offering up its remaining assets, including its 19.4% non-operated working interest in the Clair field, which is the largest in the British sector of the North Sea. The process of selling these assets may take multiple months and may or may not result in a sale.
Chevron’s decision to exit the North Sea comes after it had already ended its exploration and production activities in the region back in 2019 as part of an earlier divestment drive. This move would mark the end of a major chapter in the basin’s hydrocarbon production history, as Chevron was one of the first oil and gas companies to drill in the North Sea in the 1960s. However, the potential sale will not have any impact on the company’s other operations in the U.K., including its international headquarters in London and its research, training, and technology center in Aberdeen.
The decision to exit the North Sea is part of Chevron’s strategic focus on maintaining capital discipline in both traditional and new energies. The company regularly reviews its global portfolio to assess the strategic and competitive nature of its assets for future capital investment. Chevron’s move to exit the North Sea follows in the footsteps of other oil majors such as ExxonMobil, which exited the North Sea in 2021, and BP and Shell, which have both wound down their portfolios in the region in favor of newer, more cost-effective oil and gas fields around the world.
Chevron’s decision to exit the North Sea also comes amidst a challenging taxation regime in the U.K., with energy companies facing a 75% tax on profits under current legislation. The opposition Labour Party has promised to raise the total tax rate to 78% and remove tax relief on new projects if elected in the upcoming election. This wider setting may impact the ultimate sale price of Chevron’s remaining assets in the North Sea, with industry sources suggesting that the sale could still fetch somewhere in the range of $900 million to $1.1 billion.
Chevron had previously announced plans to sell between $10 billion and $15 billion worth of asset holdings as part of its proposed $53 billion acquisition of Hess. However, the acquisition is currently being held up due to a legal battle with ExxonMobil over assets in Guyana. The potential sale of Chevron’s remaining assets in the North Sea will be closely watched by the industry, as it marks the end of an era in the region’s hydrocarbon production history and reflects the evolving landscape of global energy markets.
