Royal Dutch Shell agrees £3bn sale of North Sea assets to Chrysaor

Around 400 staff are expected to transfer following the sale by Royal Dutch Shell of a package of as

Around 400 staff are expected to transfer following the sale by Royal Dutch Shell of a package of assets in the North Sea to Chrysaor in a deal valued at up to �3bn. Photo: Yui Mok/PA Wire - Credit: PA

Royal Dutch Shell is to sell off a package of North Sea assets for up to 3.8bn US dollars (£3bn) to smaller rival Chrysaor as it continues its divestment drive.

The oil giant’ s interests in Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block, the Greater Armada cluster, Everest, Lomond and Erskine, plus a 10% stake in Schiehallion, will all be offloaded as part of the deal.

Around 400 staff are expected to transfer to Chrysaor on their existing terms and conditions of employment.

Shell will pocket an initial 3bn US dollars, followed by a payment of up to 600m US dollars between 2018 and 2021, subject to commodity prices, with potential further payments of up to 180m US dollars for future discoveries.

The company said it would record an “accounting gain” on the sale of the assets, which pump out a total of 115,000 barrels of oil per day. Shell’s total North Sea production during 2016 was around 211,000 barrels per day.

On completion of the deal Chrysaor, backed by private equity firm EIG, will become one of the largest producers of oil and gas in the UK.

Andy Brown, Shell’s upstream director, said the firm remains committed to the North Sea: “Shell has a long and proud history in the UK North Sea, to which we remain committed.

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“This deal complements the great strides we have made over the last two years in improving the competitiveness of our UK upstream business,” he said.

“We believe this deal is a vote of confidence in the UK North Sea and offers proof that the industry’s increasing competitiveness, and improvements to the fiscal and regulatory regime, are starting to produce positive results.

“It also contributes to the UK’s goal of maximising economic recovery of oil and gas from the UK North Sea, which will continue to be a source of energy, and revenue, for the country for many years to come.”

Shell, which completed a 50bn US dollars (£38bn) acquisition of BG Group last year, is embarking on an ambitious cost-cutting drive and a 30bn US dollars (£24.6bn) divestment initiative.