SULLOM Voe Terminal operator BP has announced plans to sell part of its stake in the terminal to EnQuest – with the deal also containing a clause likely to result in the UK-based oil and gas firm take on BP’s full stake.
Following a tumble in the global oil price, last year BP scrapped its plans to build a £500 million new gas sweetening plant at the terminal.
Now it has announced it plans to sell a quarter of its 12 per cent stake in the terminal in a £68 million deal – along with a quarter of its share in the Magnus field. The agreement is expected to result in EnQuest purchasing the remainder of BP’s stakes in Sullom Voe and the Magnus field for £240 million.
The agreement also encompasses a quarter of BP’s interests in a number of associated pipelines – with the option of the remainder of its interests.
EnQuest is financing the deal from its future share of assets, so the agreement does not include any upfront payment to BP.
EnQuest chief executive Amjad Bseisu told Reuters that the move was “part and parcel of us taking maturing assets” in a strategy aimed at breathing new life into old North Sea oil fields.
Its aim is to reduce the terminal’s £150 million a year costs so it can run for longer, and it intends to retain all 340 BP staff working at the terminal and on the Magnus field.
Around two-thirds of those staff are employed at the terminal, and they are expected to transferr over to EnQuest under TUPE (Transfer of Undertakings [Protection of Employment]) regulations.
BP group chief executive Bob Dudley said: “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.
“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.”
BP North Sea regional president Mark Thomas said: “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.”
Oil production from the BP-operater Clair field will continue to be exported through the terminal, and the new Clair Ridge development will also export to the terminal when it comes on-stream.
Gas produced from the Foinaven and Clair fields will also continue to be processed at Sullom Voe, as will gas from the redeveloped Schiehallion and Loyal fields when they return to production in the coming months.
BP said it would begin consultation with staff and, subject to regulatory and other third party approvals, aims to complete the sale and transfer of the terminal operation during 2017.
Shetland MSP Tavish Scott responded to Tuesday morning’s announcement: “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.”
Unite regional officer John Boland said the trade union would do what it could to ensure the rights of its staff – approximately 240 at the terminal and around 100 at Magnus and its associated infrastructure – were safeguarded.
“Many people will look on this news as the end of an era, given BP’s long association with the Sullom Voe Terminal and the Magnus field,” he said. “It was discovered by BP way back in 1974 when the company was still owned by the public.
“BP has said it will now start consultations and Unite is pledged to making sure the rights of our members are protected in any transfer. We are clear – there should be no change to the terms and conditions of any worker moving over to employment by EnQuest.
“When transfers like th is happen, there is often a concern about potential job losses. We strongly hope that is not the case here, and we will be talking with BP and EnQuest to get a clear idea of their plans for the future so our members are fully informed.”
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