Industry trade association Oil & Gas UK hailed two big North Sea deals completed within the past 24 hours as “hugely significant” that point to “strengthening confidence in the future of the UK’s offshore oil and gas industry.”
Deirdre Michie, chief executive of Oil & Gas UK, said Chrysaor’s $3.8 billion acquisition of Shell assets represents almost 7% of the UK’s total North Sea oil and gas production while Ineos’ $250 million takeover of BP’s interests in the Forties Pipeline System represents the transport of up to 40% of production last year.
“The deals are of strategic importance to maximising the recovery of the UK’s remaining hydrocarbon resource and the new business opportunities they will open up for the oil and gas supply chain will be very welcome in the current downturn,” said Michie.
“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.
“Up to 20 billion barrels of oil and gas are estimated to remain for recovery, an essential primary resource to meet the country’s energy needs, secure jobs and generate wealth for the economy.
“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 …
“We need more deals like these.
“In the past they have helped extend the life of the basin, acting as catalysts for fresh investment, reinvigorating activity in both new and existing portfolios.
“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.”