French oil and gas major Total to exit UK midstream sector
29 August 2015
French oil and gas major Total would exit the UK's midstream sector, selling all assets for £585 million, to North Sea Midstream Partners.
But the sale should not be misinterpreted as a vote of no-confidence in the North Sea, the company said.
Along with the St Fergus processing plant located north of Peterhead, Total would sell its 100-per cent interest in a 225-mile pipeline built in 1977 to connect the terminal to the Frigg field in the North Sea.
With a capacity of 665Mmscf/d, the 234km SIRGE gas pipeline connected the Shetland gas plant to the FUKA pipeline.
Total's move comes as it looked to sell non-core assets under ''portfolio management''. The company would invest offshore and onshore in North Sea and Scandinavia.
''The sale of those midstream transportation belongings is one other instance of Complete's technique of lively portfolio administration and the robust potential to unlock worth from a variety of infrastructure belongings'', Complete chief monetary officer Patrick de La Chevardiere stated in a press release.
Total had retained a 100-per cent operating interest in FUKA which delivered gas from around 20 fields in the UK northern North Sea to the terminal.
Total had said that buyers, North Sea Midstream Partners, had awarded contracts to ''px Group'' for both the operation and maintenance of all assets.
Total also has a 67-per cent stake in the Shetland Island Regional Gas Export System (SIRGE), where also it acted as operator.
All Total staff working on site – and some in Abderdeen would transfer to px under TUPE employment regulations, growing the firm's workforce by around 25 per cent.
According to commentators, the deal reflected Total's desire to raise cash and cut costs in response to the drop in crude price since June last year.
The company last month agreed to divest its 20 per cent stake in the giant Laggan Tormore gas development off Shetland to Scottish Hydroelectric owner SSE for £565 million.
While Total insisted it would continue to be a major player in the North Sea offshore industry for many years, the disposals would add to alarm about the prospect of international oil and gas giants cutting investment in the region as fears over oil price remaining low for years grow.