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Ineos to acquire Fridman group's UK North Sea gas fields

October 12, 2015

Ineos announced on Sunday that it has agreed to purchase all of the UK North Sea gas fields owned by DEA, the German oil and gas firm owned by Russian billionaire Mikhail Fridman’s LetterOne Group.

The transaction is subject to competition clearance from the European Commission. Completion is expected later this year. The companies did not disclose financial details but most reports say that Ineos is paying about £500 million ($766.1 million) for the business.

LetterOne was forced by the UK government to sell the assets. The UK Department of Energy in April said that Fridman had six months to dispose of the oil and gas fields LetterOne acquired from RWE or see their licenses revoked as sanctions tightened against Russia over its involvement in Ukraine.

Ineos is a new entrant to the North Sea. The company is one of the world’s largest operators of chemical plants and a huge consumer of hydrocarbons and these assets should make a significant contribution to its European energy and feedstock strategy. The platforms, infrastructure and the team that runs the operation will form part of the new Ineos upstream business division based in London. The fields, the largest of which are Breagh and Clipper South in the southern North Sea, provide up to 8% of the UK’s gas. The fields are close to Ineos’s assets in northeast England and Scotland.

The company operates Scotland’s largest manufacturing complex at Grangemouth which is the only refining/petrochemicals complex directly attached to the North Sea. Ineos has recently announced its intention to be the leading UK player in onshore gas development and, as part of its growing interest in energy, the company is evaluating additional opportunities in the offshore area.

As part of the company’s ongoing business planning, it has set up a new oil and gas subsidiary, Ineos Upstream. The new team’s first task has been to conduct a strategic review of the potential opportunities in the North Sea to see whether they are suitable to play a part in the development of the Ineos Upstream business.

Rob Nevin, chairman of Ineos Upstream, says, “Ineos and its JV partners are huge consumers of natural gas, ethane, propane and condensates. North Sea oil and gas can make a significant contribution to providing these feedstocks as well as servicing our energy needs.” Ineos also owns a number of shale gas licenses in England and Scotland and is investing a further $1 billion in a major project to bring US shale gas to the UK and to Norway.

Jim Ratcliffe, Ineos chairman adds,“The acquisition of these North Sea gas fields is a great entry point for the Ineos upstream business. They are high-quality, low-risk assets and they come with a highly experienced management team. Whilst no decisions have yet been made, we will continue to evaluate other opportunities in the North Sea”.

The existing management team at DEA UK will run the business post-completion.

By Natasha Alperowicz

Source: Chemical Week

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