Swiss chemicals giant Ineos buys UK North Sea gas assets for $750 mn
12 October 2015
Swiss chemicals company Ineos Group AG yesterday struck a deal to acquire a portfolio of natural gas assets in the UK North Sea owned by Russian billionaire Mikhail Fridman for approximately $750 million (£490 million), making its entry into North Sea gas fields.
Ineos, which owns the Grangemouth petrochemical complex in Scotland, has bought the assets from the DEA Group, the German-based oil and gas firm owned by Fridman's LetterOne investment fund.
Fridman, who acquired the gas fields in March from German utility giant RWE AG, was forced to sell them, as the UK government gave an ultimatum to sell the assets in six months or face cancellation of the operating licences for the fields.
The government cited potential western sanctions against Russia and the consequent adverse impact on the fields' operation due to that country's involvement in the unrest in Ukraine.
The properties, which include Breagh and Clipper South in the Southern North Sea, supply up to 8 per cent of the UK's gas. The assets are located close to Ineos' other operations in Scotland.
Rolle-based Ineos is a global manufacturer of petrochemicals, specialty chemicals and oil products. It comprises 15 businesses with its production network spanning 65 locations in 16 countries across the world. The company's annual revenue is around $54 billion.
The acquired gas assets will form part of Ineos' upstream business based in London. Further to the closing, DEA's current management team will continue to operate the acquired business.
Ineos chairman Jim Ratcliffe said, ''We are pleased to acquire a strong portfolio of natural gas assets and bring on board a highly successful and experienced North Sea industry team.''
''Ineos has been very open about its intention to make strategic investments in the North Sea and this acquisition is our first step in fulfilling this goal,'' he added.
Ineos, which recently announced its plan to become a leading player in the UK onshore gas development, is also looking at additional offshore opportunities to fulfill its growth ambitions.
The company is backing shale gas exploration and production which involves controversial ''fracking'' method to extract fossil fuels.
Earlier this year, Ineos agreed to buy a 50-per cent interest in seven of London-based IGas Energy's shale licences in North West and also the company's interest in shale gas licence around Grangemouth in Scotland which will give company full ownership of the asset.
Ratcliffe said the North Sea acquisition is a great entry point for the Ineos Upstream business and ''they are high quality, low risk assets'' and the company will continue to evaluate other opportunities in the North Sea.
''Ineos and its JV partners are huge consumers of natural gas, ethane, propane and condensates. North Sea oil and gas can make a significant contribution to providing these feedstocks as well as servicing our energy needs,'' Ineos Upstream chairman Rob Nevin said.
The transaction is expected to close later this year, subject to approval from the European completion authorities and other customary closing conditions.