Total, one of the biggest energy firms operating in the North Sea, has sold off $900m (£585m) of UK gas interests to cut costs, amid the continuing collapse of oil prices.
The French group is disposing of its interests in two pipelines – one which delivers gas from 20 North Sea fields – and its ownership of the St Fergus gas terminal in Scotland.
The sale brings the value of disposals by Total to more than £1bn in the last two months. It follows an announcement by Maersk Oil yesterday that the company plans to shut the Janice field in the North Sea and cut 200 jobs.
The price of North Sea Brent crude was up more than 6% at almost $45.90 a barrel on Thursday, but was still trading well below half the value it had 12 months ago. The slump has been caused by huge volumes of oil from countries such as the US and Iraq at a time when demand has dropped owing to an economic slowdown in key consuming nations, such as China.
The North Sea is particularly vulnerable to cutbacks because it is a relatively high cost, “mature” hydrocarbon province where few operators expect to make significant discoveries any more.
Total made clear it wanted to raise funds. “The sale of these midstream transportation assets is another example of Total’s strategy of active portfolio management, and the strong potential to unlock value from a range of infrastructure assets,” said Patrick de la Chevardière, its chief financial officer.
The disposal has been made to the relatively small company North Sea Midstream Partners, which was formed three years ago and is backed by the US-based private equity firm ArcLight Capital.
The move by Total follows another massive sale in July, the £565m transfer of a stake in a gas field off the Shetland Islands to SSE, one of Britain’s big six domestic energy suppliers and more could follow.
Patrick Pouyanné, chief executive of Total, said in February his company could dispose up to $5bn of assets this year but not all of this would be in the North Sea.
Total was keen to say on Thursday that it remained committed to Britain. It would shortly start up the deepwater field Laggan-Tormore, off the west of Shetland.
“By the end of 2015 Total is expected to become the largest producing oil and gas company in the UK and will remain a major player in the North Sea offshore industry for many years to come,” the company said.
Critics fear the retreat of the big oil companies such as Total, Shell and BP, spells the ultimate demise of North Sea production. But the company that bought the Total assets denied this and said companies of its scale and interest could find opportunities larger firms might not.
“We see midstream infrastructure as crucial to the longevity of the North Sea and firmly believe that the independent ownership of such infrastructure can help maximise the ultimate economic recovery of [UK] oil and gas reserves,” saidAndy Heppel, chief executive of North Sea Midstream Partners.
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