BP is selling part of its interest in the Sullom Voe Terminal, marking a new chapter in the isles energy sector.
The oil giant is passing on a three per cent share of the terminal to EnQuest, and has also agreed to sell a quarter of its 100 per cent stake in the Magnus oil field – as well as some associated pipeline infrastructure – in an $85 million deal.
The sale price is expected to be met by Enquest from the sharing of future cash flows from the assets, meaning the agreement will not include any upfront payment to BP.
BP says the sale will not have any effect on its right to capacity in Sullom Voe. Both the terminal and Magnus are expected to transition to EnQuest as “fully operational entities”, with those staff who operate and support the assets expected to transfer with the businesses.
Under the terms of the agreement, EnQuest has an option to buy BP’s remaining 75 per cent interest in Magnus, as well as a further nine per cent interest in the terminal and the remainder of BP’s interests in the associated pipelines.
BP group chief executive Bob Dudley said the terminal was a natural fit for EnQuest.
“EnQuest’s experience of investing in and extending the life of mature assets in the North Sea make them a natural operator of Magnus and Sullom Voe in this later phase of their life,” he said.
“We believe this will enable them to prolong the life of the assets, benefiting the region and creating additional value for both EnQuest and BP shareholders. In addition to investing in and growing our core businesses, BP will continue to seek innovative opportunities such as this to work with partners to maximise value creation from our entire portfolio.”
Mark Thomas, BP North Sea regional president said: “In recent years, we have been focusing our North Sea portfolio around core assets west of Shetland and in the central North Sea – bringing new fields into production, redeveloping and renewing existing producing facilities, acquiring new acreage and interests through licence rounds and farm-ins and selling some of our mature assets to those who see greater strategic fit with their businesses.
“Sullom Voe and Magnus have been great businesses for BP, but to maximise the economic life of these important assets, we believe this deal will offer them a better long-term future.
“With their integrated skills, operational scale, cost structures and high levels of operating efficiency we have seen what EnQuest can do on the Thistle, Deveron and Don fields that were previously operated by BP. We believe this is a good example of having the ‘right assets’ in the ‘right hands’, offering new opportunities for the assets and benefiting the UKCS.”
Oil production from the BP-operated Clair field will continue to be exported through the terminal, and the new Clair Ridge development will also export oil to Sullom Voe when it comes on-stream.
BP says gas produced from the Foinaven and Clair fields will also continue to be processed through Sullom Voe. Gas from the re-developed Schiehallion and Loyal fields will export to the terminal when they are brought back into production in the coming months.
Around 100 BP staff are currently associated with Magnus and associated infrastructure and approximately 240 with SVT.
The contractual terms and conditions of staff making the transition are protected under UK Transfer of Undertakings (Protection of Employment) regulations (TUPE).
BP says it will now begin consultation staff affected by the move.
The sale and transfer is expected to be completed this year.
Isles MSP Tavish Scott said: “These are significant changes for who owns what around Shetland. I will be speaking to BP today and want to understand their long term plans. Oil and gas has been and will continue to be a very significant industry for Shetland.”