Chevron to exit North Sea after over half a century. Here’s why

Chevron announced plans on Thursday to sell its remaining oil and gas assets in the UK North Sea, marking the end of its more than 55-year presence in the region.

This move comes as the US energy giant prepares for a $53 billion acquisition of Hess, which includes plans for $10 billion to $15 billion in global asset sales.

The divestment will be part of a broader trend of major oil companies retreating from the ageing British basin, once a pioneering region for deepwater production since the 1970s.

Chevron's North Sea holdings include a 19.4 per cent stake in the BP-operated Clair oilfield, the largest in the region with a production capacity of 120,000 barrels per day.

BP is considering a third development phase, Clair South, which is one of the last major untapped fields in the North Sea.

Chevron's departure from the North Sea basin reflects a decline in UK oil and gas production, which has dropped from a peak of around 4.5 million barrels of oil equivalent per day (boed) in the late 1990s to approximately 1.2 million boed in 2023.

The company also plans to sell its marginal interests in the Sullom Voe oil terminal and its stakes in the Ninian and SIRGE pipeline systems connected to the hub.

Industry sources estimate that the sale could generate up to $1 billion, excluding tax benefits.

The formal sales process is expected to begin in June.

However, this divestment will not affect the operations of Chevron's international headquarters in London or its technology centre in Aberdeen.

Chevron’s exit is part of a strategic review of its global portfolio aimed at focusing on its most profitable assets, as emphasised by CEO Mike Wirth.

The company has been gradually reducing its North Sea presence, having sold its stake in the Rosebank field to Equinor in 2018 and many of its North Sea assets to Ithaca Energy in 2019.

Other oil majors like Exxon Mobil, ConocoPhillips, and Shell have also sold assets in the region since the 2000s.

David Moseley, an analyst at consultancy Welligence, noted, "Chevron continues the trend that has seen the North American majors seek to exit the UK."

He suggested that potential buyers could include independent companies looking to expand their operations.

The planned sale is not influenced by the UK government's 35 per cent windfall tax on North Sea producers, which was imposed following the surge in energy prices in 2022.

Chevron emphasised that the decision is part of its ongoing strategy to maintain capital discipline in both traditional and new energy sectors, regularly reviewing its global portfolio to ensure assets remain strategic and competitive for future investments.

(With inputs from Reuters)