26th May 2018
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BP scotches talk of Sullom Voe transfer to TAQA as assets sold

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BP has pooh-poohed speculation that management of Sullom Voe is to transfer to the Abu Dhabi oil company TAQA, which owns the biggest share in the terminal.

Rumours that some of BP’s North Sea interests may be relin­quished or sold off has been fuelled by its current bid to sell assets worth £10 billion to pay for the damage caused by the Gulf of Mexico disaster.

The terminal belongs jointly to the oil companies that own the Brent and Ninian pipeline systems from the East Shetland Basin. TAQA Bratani already operates the Brent system, having taken over from Shell last year.

Suggestions of a possible take­over of the management of Sullom Voe have been circulating inside the terminal although it is not clear why BP would opt to give up on the millions of pounds it is paid by the others to run it.

The main owners of the terminal these days are TAQA with 24 per cent, Canada Natural Resources (CNR) with 22 per cent, BP with 14 per cent and Total, Shell and Esso with around 9 per cent each.

One commentator who had not heard the speculation said TAQA taking over might not be good news for Shetland if it looked to increase profits by cutting terminal costs and jobs.

However there appears little basis in fact for the current specu­lation. A BP spokesman said this week he had no information on deals with TAQA but his company does not comment on speculation anyway. He pointed out that BP has an ambitious plan for investing £1bn a year in the North Sea rather than divesting, which includes phase two of the Clair field and a new production ship for Schiehallion.

A TAQA spokesman, based in the Netherlands, also dismissed talk of deals pending with BP but was unable to provide a statement before we went to press.

So far, BP’s current sale of upstream assets has not yet involved the UK. It announced this week the sale of gas assets worth £7 billion in the United States, Canada and Egypt to the US Apache Corpor­ation. The estimated cost of the oilspill off the US so far is £4bn.

More sales announcements will be made later but several billion is expected to come from divestment of assets in Vietnam and Pakistan, leaving little requirement to shed North Sea interests.

However, BP constantly reviews its portfolio of assets and it said this week its divestment programme was focusing on some “non-core upstream assets” which it considers strategically more important to other parties than to BP. In theory, that could include some of more than 45 fields and 10 pipeline systems it operates in the UK. BP still produces around 12 per cent of UK production and says it remains the biggest producer and investor in the UK North Sea and West of Shetland.

While BP still runs the Ninian pipeline into Sullom Voe, TAQA operates the Brent pipeline on behalf of about 20 companies. The Brent system carries oil from around 20 North Sea fields, accounting for about 37 per cent of the terminal’s throughput.

TAQA, a subsidiary of the Abu Dhabi National Energy Company, aims to become a leading explor­ation and production company in the UK continental shelf. It already has fields off Shetland such as Cormorant, Tern, Eider, Kestrel and Pelican as well as the Brae assets off Orkney.

While part of BP’s post-Gulf of Mexico disaster change of plan is a “significant reduction” in its world­wide capital expenditure pro­gramme, the company is continuing to move towards committing itself to the two major projects planned for west of Shetland.

The company confirmed earlier this year its intention to build a two-platform £4bn expansion to Clair, called Clair Ridge, and to replace the problematic Schiehallion pro­duction ship with an improved version costing £1.3bn.

Last week it emerged that the Norwegian company Aker Solutions has been awarded the £176 million contract to build the steel structures (jackets) onto which the Clair Ridge platforms will be constructed. Fabrication will begin next June if BP gives the final sanction to the field development. The jackets will be delivered in early 2013.

The biggest contract, to build the topsides for the two platforms, will be awarded in the next few months, according to a BP spokesman. The Clair Ridge development could produce 120,000 barrels of extra oil a day to pipe to Sullom Voe, boosting the terminal’s throughput by more than one third and more than trebling Clair’s current production level.

Two Korean companies are still competing to build the new pro­duction ship for Schiehallion, known as the Quad 204 project. The field is currently out of action for another maintenance period, having suffered a series of difficulties in its short lifetime. The contract is expected to be awarded before Christmas and the project formally sanctioned early next year.

Two other BP investment pro­jects in the North Sea involve the new Kinnoull oilfield off Peterhead and the Devenick gas development south-east of Shetland.

Meanwhile, Total announced last week it had received approval from the UK and Norwegian governments to develop the Islay gas field off Shetland, which straddles the boundary line between the two countries.

Islay will connect to Total’s Alwyn platform with first gas to be piped to the Scottish mainland in the second half of next year. It holds the equivalent of 17 million barrels of oil.

Total is currently full steam ahead with its Laggan-Tormore gas development to bring gas from west of Shetland to a new gas plant to be built next to the Sullom Voe terminal.

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