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BP offloads North Sea pipeline stake

The Cats pipeline begins at a riser platform in the central North Sea and transports gas some 250 miles (400km) to a processing terminal in Teesside

BP on Thursday unveiled the sale of another North Sea asset as it continues to wind down its exposure to mature assets in the oil and gas basin that is grappling with the collapse in crude prices.

The London-listed oil major is to raise $453m through the sale of its 36 per cent stake in the Central Area Transmission System, one of Europe’s biggest gas pipeline networks, to Antin Infrastructure Partners, the private equity firm.

The BP disposal comes in the same week that Bob Dudley, chief executive, predicted a “massive” wave of restructuring in the UK’s North Sea, warning that its mature fields will be hit hard by the 40 per cent plus collapse in Brent crude prices since last summer.

Antin is already the largest shareholder in the CATS following a $1bn deal last year to buy a controlling stake from BG Group.

Under the terms of the BP deal with Antin, the oil major will receive £302m for the transfer of its stake in CATS, plus potentially a further £22m, subject to closing adjustments on the transaction. Completion of the deal is expected by the end of the year.

BP has been selling assets in the North Sea as part of a broader disposal programme following the Deepwater Horizon disaster in the Gulf of Mexico in 2010. The downsizing has been necessary to meet the cost of the clean-up, as well as pay compensation and regulatory fines.

In 2012 BP agreed to sell $400m of North Sea gas assets to Perenco of France. Later that year it sold stakes in several North Sea oilfields in a $1bn deal with Taqa, the Abu Dhabi energy group.

However, BP remains one of the biggest investors in the North Sea, for example through its $4.5bn Clair Ridge project west of Shetland.

On Tuesday, Mr Dudley pointed to the prospect of “painful adjustment” in the North Sea if it was to remain a destination for future investment. “I think you’re going to see some massive restructuring going on,” he said at a conference in Texas.

However, Trevor Garlick, head of BP’s operations in the North Sea, said on Thursday the oil major remains committed to the basin in spite of its divestment programme.

“The North Sea is an important region for BP,” he said, adding BP would achieve “the completion of our major projects in the central North Sea and Shetland area, and continued management of our portfolio.”

The Original Posted by Michael Kavanagh in London / FT.com