Centrica Plc is to create a joint venture with Norway's Bayerngas Norge AS and combine its European exploration and production units with Bayerngas Norge.
The joint venture will comprise Centrica's assets in the UK, Netherlands and Norway and Bayerngas Norge's assets in the UK, Norway and Denmark.
German utility Stadtwerke Munchen GmbH (SWM) and Bayerngas GmbH are shareholders in Bayerngas Norge.
Centrica would have a 69 percent ownership in the JV and will contribute the whole of its European E&P business and make a series of deferred payments totaling about £340 million post tax to the new company between 2017 and 2022.
The existing shareholders of Bayerngas Norge, led by Stadtwerke Muenchen and Bayerngas GmbH, will contribute all of their shares in Bayerngas Norge in exchange for a 31% stake.