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Shell PLC has agreed to acquire a 30 percent stake in the Bay du Nord oil project off the coast of the Canadian province of Newfoundland and Labrador, following BP PLC’s exit.
“The transaction supports the continued maturation of Bay du Nord towards an investment decision currently targeted for early 2027”, Norwegian majority state-owned Equinor, which will retain a 70 percent operating stake, said in an online statement.
The project, located about 500 kilometers (approximately 310 miles) off the coast in the Flemish Pass basin, includes 10 licenses in which BP owned an average stake of 37.21 percent.
With a projected investment of around CAD 14 billion (around $9.8 billion), Bay du Nord would develop an estimated 400 million barrels of recoverable oil in the first phase, according to Equinor. The plan involves tieback to a floating production, storage and offloading vessel. Equinor expects to begin production 2031.
“The transaction supports Equinor’s approach to portfolio management, capital allocation and risk sharing in large-scale developments”, Equinor added.
“The project is currently finalizing the front-end engineering and design, with continued work focused on strengthening capital efficiency, execution planning and overall project robustness”, it said.
Shell said separately, “The transaction provides Shell with an attractive entry point, with expected returns above our hurdle rate, and exposure to an established resource base with potential longer-term growth, consistent with our disciplined approach to building a competitive portfolio”.
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The Newfoundland and Labrador government announced March 3 it had reached an agreement with Equinor to allow the project to continue and the province to own a stake of up to 10 percent.
Discovered 2013, Bay du Nord had been paused since 2023. At the time, Equinor cited “changing market conditions and subsequent high-cost inflation”. Under the 2018 “framework agreement” for Bay du Nord, initial production had been targeted for 2025.
Bay du Nord is the province’s first standalone offshore hydrocarbon development since Hebron and its first deepwater project, according to the province’s Energy and Mines Department.
BP exited the project as part of its capital discipline strategy, just after its reorganization from three segments into two – upstream and downstream.
“This organizational change builds on the concrete actions BP is taking to simplify its portfolio, reduce costs, maintain tight capex discipline and strengthen its balance sheet – all in service of growing value and returns for shareholders”, BP said in a statement June 9.
Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
