Shell and ExxonMobil sell offshore North Sea assets in US$246m deal

SHELL and ExxonMobil have agreed to sell their joint Dutch North Sea venture to Canadian company Tenaz Energy in a deal worth US$246m, further distancing themselves from the shrinking Netherlands gas market.

 Along with the shutdown of the onshore Groningen gas field, Nederlandse Aardolie Maatschappij (NAM) Offshore BV is undergoing a restructure to scale back on gas production, only producing from “small fields” on land and sea. 

Martijn van Haaster, director of NAM, said: “With this sale, we are concluding our 60 years of offshore activities, and a new chapter is starting for our colleagues and for NAM.”

Fall in North Sea natural gas production

Production of natural gas in the UK and Dutch regions of the North Sea has been on the decline in recent years due to shrinking demand and environmental concerns.

Dutch households consumed 11% less gas in 2023 compared to the previous year, and natural gas extraction declined by 34%. The Netherlands’ reliance on imports has risen for both liquified and gaseous natural gas, with the bulk of imports coming from Norway and the US.

Similarly, the UK has seen a steady decline in natural gas liquids (NGLs) production from 3.3m t in 2020 to a projected 2.12m t in 2024, with the government promising a “phased and responsible” transition away from drilling in the North Sea.

With the pool for exploration growing smaller, companies have been pulling out of the Dutch North Sea, with ExxonMobil last year selling its XTO Netherlands operation to Tenaz.

Inside the deal

The sale will almost quadruple Tenaz’s total corporate production – in 2023, NAM produced 1.1bn m3 of gas, enough to supply a million Dutch homes with gas for a year. Tenaz will take over all NAM’s offshore exploration and production business, connected pipeline infrastructure, and onshore processing in the Netherlands.

However, the deal does not include NAM’s assets in the onshore Ameland area, which the joint venture has been operating since the 1980s.

The assets consist of production and exploration licences in the Dutch North Sea which span 2,415 km. Gas is produced from six hubs and two main production areas in the region.

Tenaz expects the acquisition of NAM will close in mid-2025 and plans to expand gas drilling by around 30 locations.

Anthony Marino, CEO of Tenaz, said: “This acquisition is an important step in our strategy of securing value enhancing acquisitions that have substantial organic investment opportunities. We welcome NOBV’s (NAM Offshore BV) workforce of highly skilled and experienced professionals who will be critical to the continued success of Tenaz.”