Centrica has launched a joint venture oil and gas exploration and production (E&P) firm with Bayerngas Norge, to be called Spirit Energy which is expected to generate up to £150 million of cost savings.
The new company will employs 700 people and will invest between £400 million and £600 million per year.
Centrica will hold 69% in the new company and Bayerngas will have 31%
Centrica said the new entity will contain Centrica’s assets in the UK, Netherlands and Norway and Bayerngas Norge’s in Norway, the UK and Denmark and production for 2017 is expected to be around 50 million barrels of oil from 27 fields.
Iain Conn, CEO of Centrica said: “With the creation of Spirit Energy, we have now completed the first phase of our portfolio transformation as we reallocate resources towards our customer-facing businesses, leaving Centrica well-positioned to deliver longer-term returns and growth.
“As one of the largest independent E&P companies in north-west Europe, Spirit Energy will have the possibility to participate in further consolidation and joint ventures, and creates further optionality for Centrica’s shareholders.”
Commenting on the news Deirdre Michie, Chief Executive of Oil & Gas UK, said:
“We welcome the arrival of a new independent operator to the North Sea. The launch of Spirit Energy is another positive sign of the strengthening belief in the future of this basin. It comes at a time of much merger and acquisition activity clearly signalling the investment potential of the UK Continental Shelf.
“Billions of barrels of oil and gas still remain within the basin. We need a diversity of companies with fresh ideas and innovative thinking to ensure we make the most of our own indigenous resources, which are vital for helping to meet our energy needs, and which also support hundreds of thousands of UK jobs.”