The company will be the largest of its kind “focused purely on the Norwegian Continental Shelf”, the companies said in a statement, creating a new heavyweight after Norway’s state-owned energy giant Equinor.

The combined firm is expected to produce 400 million barrels of oil equivalent next year. With reserves estimated at 2.7 billion barrels, it hopes to raise production to more than 500 million barrels by 2028.

Aker BP chief executive Karl Johnny Hersvik said the merger will create an exploration and production “company of the future which will offer among the lowest CO2 emissions, the lowest cost, high free cash flow and the most attractive growth pipeline in the industry”.

He said it would also provide investors with strong dividends, pledging to increase them by at least five percent per year if oil prices remain above $40 per barrel.

The merger will see Lundin Energy shareholders receive $2.2 billion in cash plus newly-issued stock in Aker.

British oil major BP, which held a nearly 28 percent stake in Aker, will have a 15.9 percent stake in the combined company.

Norway will not grant new oil exploration licences in virgin or little-explored areas in 2022. But the deal does not rule out awarding oil licences in already heavily exploited areas.

Since the North Sea has been extensively explored, the agreement mainly concerns the Barents Sea in the Arctic

The oil industry was a major issue in legislative elections in September, indicating Norway’s growing difficulties in reconciling environmental concerns with exploiting energy resources.