Petro-chemicals colossus INEOS – which owns the Grangemouth refinery – has bought the Dong Oil & Gas Business from DONG Energy for $1.05 billion.
The deal positions INEOS as a Top Ten company in the North Sea and the biggest privately owned oil exploration and production business operating in this energy basin.
DONG Energy’s oil and gas business comprises a mix of long-life and development fields, producing an average of 100,000 boepd (in 2016) in the North Sea, with around 570 million boe of commercial and potential oil and gas reserves in West of Shetland fields and in Denmark and Norway.
The portfolio includes three ‘world class’ fields; Ormen Lange is the largest field in the DONG portfolio and the second largest gas field in Norwegian waters, Laggan-Tormore is a new gas field West of Shetland which came on-stream early 2016 and Syd Arne is a large oil field in the Danish North Sea.
Production from the Laggan and Tormore fields started early 2016. The development of the Laggan-Tormore fields also comprise a transport system for the gas to Scotland via the Shetland Islands. This transport system now provides an opportunity for existing and future discoveries in the area.
On completion, 440 people will transfer to INEOS, working across a portfolio of production, development, exploration and appraisal assets. INEOS will also make a contingent payment of $150 million related to the Fredericia stabilisation plant and a contingent payment of up to $100 million subject to the development of the Rosebank field.
Jim Ratcliffe, INEOS chairman, commented: “The DONG Oil & Gas business is a natural fit for INEOS, further strengthening our long-term Upstream activity, which was founded on the acquisition of both DEA’s and Fairfield’s UK portfolios in 2015 and, more recently, the Forties Pipeline System from BP.”
The deal with INEOS also means that DONG Energy – the world’s biggest offshore wind power plant operator – is now entirely based on renewables.
M&A deal-making in the North Sea has picked up in recent months amid steadier oil prices, following a slump that brought transactions to a halt in the ageing basin.
Holyrood MP Alexander Burnett, the Scottish Conservative energy spokesman, commented: “This is a significant acquisition that will make INEOS the largest private enterprise operating in the North Sea.
“The deal will protect jobs that already exist within the Dong oil and gas business, but will also work towards the UK Oil and Gas Authority’s aim of maximising economic recovery from the UK Continental Shelf.
“As expected, we have seen a considerable amount of merger and acquisition activity in recent months. I think overall, there are increasingly positive signs for the industry after what has undoubtedly been an extremely difficult period.”