Energy giants Shell Plc and Exxon Mobil Corp. have cancelled a proposed agreement to divest their natural gas assets in the UK North Sea to Viaro Energy, an upstart independent firm.
The termination of the deal, which included the critical Bacton onshore gas terminal and 11 offshore facilities, follows a prolonged regulatory review by the North Sea Transition Authority (NSTA).
Shell confirmed that the transaction could not be finalised because “completion conditions were not met as commercial and market conditions evolved.”
Viaro Energy’s founder and CEO, Francesco Mazzagatti, commented on the mutual decision:
“The parties have worked hard and in close alignment to try and complete this transaction over many months, but despite this being a fully funded opportunity, the completion conditions were not met as commercial and market conditions evolved and we mutually agreed not to proceed.”
The deal, initially announced in the summer of 2024 with an expected completion in 2025, involved assets of considerable national importance. The Bacton terminal, located on England’s east coast, serves as the sole entry point for gas imports from Belgium and the Netherlands, contributing up to one-third of the UK’s gas supply. It has been a cornerstone of UK energy security for over 50 years, operational since 1968.
The NSTA had been awaiting “additional information requested from the purchasing party to make a decision,” a spokesperson for the regulator noted. The authority, which has recently bolstered its powers to oversee mergers and acquisitions in the North Sea, applies a ‘fitness test’ to prospective licence holders, factoring in any ongoing investigations or legal proceedings. This increased scrutiny forms part of the NSTA’s broader mandate to ensure the maximisation of economic recovery from the UK Continental Shelf while also facilitating the energy transition.
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Viaro Energy, through its subsidiary RockRose Energy, has been an active acquirer of UK North Sea oil and gas assets over the past five years. However, Francesco Mazzagatti is currently facing criminal charges in Italy and civil forgery and fraud allegations in the UK, all of which he denies. These allegations include claims of illicitly profiting from an Iranian petrochemical company later subjected to US sanctions and embezzling funds.
The cancellation leaves Shell and Exxon Mobil to consider alternative buyers for the assets. This development occurs within a broader trend of major oil companies divesting mature North Sea portfolios to streamline operations and adapt to evolving energy markets. The UK North Sea also presents a challenging fiscal environment, with the Energy Profits Levy contributing to one of the highest tax rates globally for the sector, which has reportedly stifled investment.
Notably, Shell recently merged its wider UK North Sea upstream business with Equinor’s to create Adura, poised to become the largest independent oil and gas producer in the basin. However, the Bacton onshore gas terminal and several other Southern North Sea assets were strategically retained by Shell, underscoring their unique value to the company’s UK operations and the nation’s energy infrastructure.
