Deirdre Michie, chief executive at the industry trade association Oil & Gas UK (OGUK), has welcomed two recently completed major North Sea deals.
Commenting on the deals, Michie said: “These two deals are hugely significant, and point to strengthening confidence in the future of the UK’s offshore oil and gas industry.”
As far as the Chrysaor-Shell transaction is concerned, the assets were sold for a fee of up to $3.8bn, including an initial consideration of $3bn and a payment of up to $600m between 2018- 2021 subject to commodity price, with potential further payments of up to $180m for future discoveries.
Chrysaor bought Shell’s interests in Buzzard, Beryl, Bressay, Elgin-Franklin, J-Area, the Greater Armada cluster, Everest, Lomond, and Erskine, plus a 10% stake in Schiehallion.
This sale was announced on January 31, 2017, as part of Shell’s previously announced $30 billion divestment program and was completed on Wednesday, November 1.
“Chrysaor’s $3.8bn acquisition of Shell assets represents almost 7 percent of the UK’s total North Sea oil and gas production while Ineos’ $250m takeover of BP’s interests in the Forties Pipeline System represents the transport of up to 40 percent of our production last year,” added Michie.
Following talks for the sale of Forties pipeline in March, BP confirmed in early April that operatorship of the FPS assets and business would transfer to Ineos after the completion of the transaction. Ineos announced the closing of the acquisition of the FPS on Tuesday, October 31.
The acquisition encompasses the FPS business and existing customer contracts and assets including the Forties Pipeline System, FPS equipment on Apache’s Forties Charlie platform, Forties Unity platform, BP’s interest in the GAEL N, and GAEL S pipeline, 36” Forties sea-line, St Fergus-to-Cruden Bay natural gas liquids line, Cruden Bay terminal, 36” Cruden Bay-to-Kinneil land-line, Netherley, Brechin and Balbeggie pumping stations, Kinneil terminal, LPG storage and export at Grangemouth and Grangemouth docks, Kinneil-to-Dalmeny pipelines, Dalmeny tank farm and pipelines to Hound Point, and Hound Point jetties.
“The future of the basin will thrive on maintaining a diversity of operators producing our oil and gas.”
Michie said: “The Forties Pipeline is a critical UKCS asset, and its integration with Ineos’ assets at Grangemouth is an efficient solution that will help unlock new investment opportunities upstream. The completion of the deal consolidates Ineos’ position as a top ten company in the North Sea and the largest privately owned exploration and production business operating in the energy basin.
“Chrysaor is now a top independent oil and gas company and one of the UK’s largest producers on an equity basis. The company is intent on exploring and investing in its new portfolio, which underlines confidence in the potential this basin still holds.”
Michie further added: “The future of the basin will thrive on maintaining a diversity of operators producing our oil and gas; we welcome Shell and BP’s continued significant presence here as well as the arrival of new companies to the sector like Chrysaor and Ineos.”
The UK needs more deals like these since they helped extend the life of the basin in the past, acting as a catalysts for fresh investment, according to the Oil & Gas UK chief executive.
Michie concluded: “While many of the levers are in industry’s hands, the government can help. Allowing the transfer of tax history along with the sale of assets to their new owners would be one such measure we are discussing with Treasury, and we are hopeful of movement on this in the Budget later this month.”
Offshore Energy Today Staff