Page 15 - Euroil Week 28 2020

EurOil INVESTMENT EurOil
Total eyes sale of North Sea gas pipeline
FRANCE
The SEAL pipeline ships gas from the Shearwater and Elgin Franklin platforms onshore.
FRANCE’S Total is seeking a buyer for its 27.5% stake in the Shearwater Egin Area Line (SEAL) gas pipeline in the UK North Sea, sources told Reuters, estimating that the sale could raise $200mn.
Total has held direct talks with several interested parties, the sources said, although the French major has not confirmed the negotiations.
The SEAL pipeline is operated by Royal Dutch Shell and delivers gas from the Shearwater and Elgin Franklin platforms to the Bacton gas terminal on the Norfolk coast. Shell also operates Shearwater, while Elgin Franklin is led by Total.
e collapse in oil and gas prices owing to the coronavirus (COVID-19) pandemic led to a slump in merger and acquisition (M&A) activity. Many deals agreed before the price rout have col- lapsed or undergone signi cant renegotiation.
Total agreed last summer to sell a package of non-core UK North Sea assets to Norwegian private equity fund HitecVision and Omani oil group Petrogas for $635mn. But this May, it
revealed that Petrogas had dropped out of the deal and it had renegotiated nancial terms with HitecVision alone. e transaction is expected to close in the third quarter.
Oil and gas pipelines and other energy infra- structure are seen as a safer bet for investment in the current volatility, as they usually guaran- tee steady returns over a long time. Indeed, the biggest investment to come out of the downturn so far has been the $10bn purchase of a stake in the gas pipeline network of the UAE’s ADNOC by a group of infrastructure investors. at deal was closed on July 15, one of the investors, Italy’s Snam, con rmed in a statement.
e sale of the SEAL pipeline also ts with Total’s strategy. e company sold a 30% stake in a French fuel pipeline system to a local rm in August.
“Rather than own infrastructure assets, the group’s aim is to hold contracts to use infra- structure when needed to manage its indus- trial assets,” CFO Jean-Pierre Sbraire said when announcing the deal. ™
PERFORMANCE
Ireland’s Kinsale gas fields cease flows
IRELAND
The Kinsale elds have been owing gas since 1978.
THE group of elds that for many decades were Ireland’s only source of domestic gas supply have ceased production.
e Kinsale area elds, consisting of Kinsale Head, Ballycotton and Seven Heads, have been owing gas since 1978. ey have yielded a total of almost 2 trillion cubic feet (57bn cubic metres) of gas in their lifetime, and until 2015, were the only producing gas elds in Ireland. at year the Corrib gas eld was brought on stream.
The Kinsale fields’ operator PSE Kinsale Energy, a subsidiary of Malaysia’s Petronas, said in April 2018 that the Kinsale elds were reach- ing depletion. It submitted a plan for decommis- sioning them in June 2018, which was approved the following year.
PSE has now con rmed that all necessary measures have been completed to safely decom- mission the eld’s facilities, the Irish O shore Operators’ Association (IOOA) has said. Inter- national contractors have been hired to carry out the work, which will continue over the next two to three years, according to PSE. All wells will be permanently plugged and the associated facili- ties, such as platforms, pipelines, cables, subsea structure and the onshore terminal at Inch in East Cork, will be decommissioned.
“ e Kinsale area gas elds have reached the end of their productive life, which marks a very
signi cant milestone in the history of gas explo- rationandproductioninIreland,”PSECEOFer- gal Murphy said, noting their contribution to the local economy over the years.
e shutdown of the Kinsale elds follows a pledge by Ireland’s new coalition government to ban the issue of new gas exploration and produc- tion licences. e move means that Ireland will be far less likely to nd deposits similar in size to Kinsale Head and Corrib.
Corrib currently accounts for 95% of Irish gas production, but it too is mature, and out- put is falling. At the same time, the government has taken a tougher stance against the devel- opment of new LNG import capacity, ruling out any projects that are intended to import fracked gas, such as US-based New Fortress Energy’s long-delayed Shannon regasi cation project.
“Ireland will be almost totally dependent on Britain for gas supply within 10 years unless new supply sources are established,” IOOA CEO Mandy Johnston warned in an article published in the Irish Examiner, calling for the government to reverse its course.
“Repeating the success of Kinsale for Ireland for the local Cork area also requires political courage, an acceptance that the right and logical course is not always the popular one,” she said.™
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