Centrica has signed an agreement with Stadtwerke München to form a new oil and gas exploration and production (E&P) joint venture.

The partnership will combine Centrica’s European oil and gas exploration and production with Bayerngas Norge to create a new E&P JV, which will serve European market.

Under the deal, Centrica will hold 69% stake in the JV, while Bayerngas Norge’s existing shareholders, led by SWM and Bayerngas, will own the remaining 31% stake in the project.

The new JV will include Centrica’s assets in the UK, Netherlands and Norway, as well as Bayerngas Norge’s assets in the UK, Norway and Denmark.

According to Centrica, the JV will become one of Europe’s leading independent E&P companies with 2016 year-end 2P reserves of 409mmboe, and 2016 year-end 2C resources of 216mmboe.

This year, the new JV is expected to have production in the range 50-55mmboe from 27 producing fields.

The new business will include producing assets, development options and exploration licences, in addition to one operated UK onshore terminal at Barrow-in-Furness.

It also includes significant near and medium-term production from established assets such as Morecambe, Greater Markham, Kvitebjørn and Statfjord, as well as on-stream assets such as Valemon, Cygnus and Ivar Aasen.

In addition, the JV owns development assets such as Maria, Oda, Fogelberg and Skarfjell in Norway and Hejre and Solsort in Denmark

Subject to regulatory approvals and other conditions, the deal is expected to complete in the fourth quarter of this year.

Centrica Group chief executive Iain Conn said: “As part of our strategy of 2015, we have been aiming to develop a more focused and stronger E&P business which will contribute to the resilience of the Group while limiting Centrica’s E&P participation.

Stadtwerke München chief executive “We are convinced that by combining our E&P activities we will create an even stronger and more sustainable business. With its similar background and strategy, Centrica is an ideal partner to develop and grow this joint venture together.”

Image: Centrica and Stadtwerke München have created a new oil and gas exploration and production business. Photo: courtesy of Centrica plc.