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ABU DHABI: Abu Dhabi National Energy Co (Taqa) will buy a number of BP’s North Sea assets for over $1.3bn in a sign relations between Britain and the Gulf emirate are on the mend.
The deal comes weeks after a visit by Prime Minister David Cameron to the emirate amid reports BP was set to lose its major role in the oil sector of the UAE because of strained relations between the two countries.
The sale suggests BP could still win back its positions in the UAE, where the oil giant played a big role from the start of the oil industry in the early 1930s. For Taqa, the deal is important as it boosts access to North Sea production, home to the global oil benchmark Brent. Companies gain valuable insight into oil pricing patterns when they operate in North Sea fields.
“This is a vote of confidence in the UK economy and once again, highlights the North Sea’s position as a global energy hub,” Cameron was quoted in a Taqa statement as saying. Taqa said the deal followed a constructive dialogue between the oil and gas industry and the U.K. Treasury, resulting in changes to the tax treatment of North Sea assets.
Taqa, owned 75 percent by the Abu Dhabi government, is the largest investor from the United Arab Emirates in Britain, having invested over $3bn in four years.
BP, which needs cash for repayments as part of the settlement for its U.S. Macondo oil spill, said the Taqa deal brings its asset divestment programme close to the targeted $38bn as it has now entered into deals to sell assets worth around $37bn.
BP said the sale will generate $1.058bn plus future payments which, dependent on oil price and production, are expected to exceed $250m. BP will sell Taqa its interests in the Harding (70 percent), Maclure (37.03 percent), and Devenick (88.7 percent) fields in the Central North Sea.
Taqa will also increase its non-operated interests in the Brae area and associated transport infrastructure including the SAGE system, Forties-Brae and Forties-Braemar pipelines.
On completion, the acquisition is expected to increase Taqa’s net production by approximately 21,000 barrels of oil equivalent per day from the current 40,000 boepd.