27th May 2018
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Wealthy middle eastern oil producer now largest shareholder in terminal

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By PAUL RIDDELL

THE LARGEST single share of the Sullom Voe oil terminal is now effectively owned by the government of a wealthy middle eastern country after a major takeover deal announ­ced this week.

The precise effect of the acqui­sition of almost quarter of the equity of the terminal from Shell UK and Esso Exploration and Production (UK) by Taqa Bratani – a wholly-owned subsidiary of the Abu Dhabi National Energy Company which was set up by the United Arab Emirates government to invest its oil billions – on its future operation has yet to be determined.

But oil industry and council figures said the news was positive given the declining output of the North Sea in recent years, which has sharply reduced the flow of revenue into the SIC’s reserve funds.

Under the £425 million deal Taqa also bought six North Sea fields from Shell and Esso – Tern, Kestrel, Eider, Cormorant North, South Cor­morant and Pelican – and a 27 per cent stake in the Dana-operated Hudson field as well as a share of the Brent pipeline system.

The firm intends to carry out a £500 million investment programme over the next three years, even with the price of Brent crude having fallen from over $150 at the height of the summer to $48 a barrel on Wednesday.

“The financial commitment we are making today will extend the productive life of these fields and, when combined with our existing UK and Dutch North Sea base, brings us one step closer to our strategy of building a diverse global portfolio of energy businesses,” said Taqa chief executive Peter Barker-Homek.

Sullom Voe terminal manager Lindsay Boswell, who is employed by operators BP, met with senior Taqa executives in Aberdeen on Tuesday and described the discus­sions as “positive”.

He said: “It changes the configu­ra­tion [of terminal ownership] now – they are the largest equity owner. What we now have is a major new owner and we look forward to working with them.”

Mr Boswell said any investment that helped to extend the life of the fields in question would be a good thing for Sullom Voe as it would also extend the life of the terminal.

SIC chief executive Morgan Goodlad said senior Taqa executives had agreed to a meeting with council officials very soon. The council would be keen to establish whether as a major stakeholder Taqa would replace Shell on the oversight body the Sullom Voe Association (SVA) which deals with the oil agreements. “Whether Taqa will assume that position is a matter still to be clarified,” he said.

He added: “On the face of it appears good news to have a significant new investor in the terminal and the Brent pipeline system. Whether that [means a] longer term life for the terminal re­mains to be seen. Volumes continue to decline on both Brent and Ninian systems. Any new investment that would stem the rate of decline would obviously be welcome.

Mr Goodlad said the future of the terminal would depend largely on developments west of Shetland, with Schiehallion contributing around 40 per cent of tanker movement volume.

Meanwhile Taqa has hired Wood Group Engineering (North Sea) Ltd, a subsidiary of the John Wood Group, to provide operating and maintenance activities and to act as duty holder for its offshore assets in the North Sea. Within nine to 18 months, Taqa plans to assume the role of duty holder, with Wood Group continuing as operating and maintenance contractor.

In the past two years, Taqa has bought BP’s Dutch gas exploration and production assets and Talisman Energy Brae assets in the UK North Sea.

Beyond oil, the company is planning liquefied natural gas projects to help meet soaring demand in Europe.

The company holds 85 billion United Arab Emirate dirhams ($23.1 billion) in assets in power generation, water desalination, upstream oil and gas, pipelines and gas storage.

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