January 25, 2017 [OPIS] - BP agreed to transfer a quarter of its direct 12% share in Scotland's Sullom Voe oil terminal with operatorship to U.K.-based EnQuest, granting the oil and gas developer the option to buy the remaining interest at a later stage while reserving the right to use capacity, the British oil major said Tuesday.
The 3% share sale is part of an $85 million cash-flow-sharing deal that further includes a 25% stake in BP’s fully owned Magnus field in the North Sea and shares in associated pipelines — 9% of 36% in the northern leg gas pipeline and 3.83% of 15.32% in the Ninian system — to be paid from future cash flows rather than upfront.
Operatorship in both the terminal and field will pass to EnQuest on completion, expected during 2017, subject to relevant approvals, also from co-owners. BP plans to retain a 4.4% interest through its subsidiary Britoil.
Originally built to receive oil and gas from northern North Sea fields to the east of Shetland via the Brent and Ninian pipeline systems, the four-jetty facility — with 16 storage tanks of 600,000 barrels each — now also serves newer developments on the Atlantic margins west of Shetland, such as Schiehallion and Clair. BP has been acting as operator for a consortium of oil companies (see OPIS alert, Nov. 29, 2016).
“The sale will not affect BP’s rights to capacity in SVT [Sullom Voe Terminal],” the group said. Accordingly, oil output from the BP-operated Clair field will continue to be exported through the terminal, and future flows from the Clair Ridge development will be routed through the facility, too.
Also, gas streams from the Foinaven and Clair fields will continue to be processed at Sullom Voe, which will further handle gas exports from the re-developed Schiehallion and Loyal fields when they return to production in the coming months, BP said.
The option to purchase BP’s remaining Sullom Voe, Magnus and pipeline shares for $300 million will be open from mid-2018 to mid-January 2019. If exercised, BP would also “retain 50% of net cash flows from these assets, up to a limit of $1 billion,” after recovering the sale price and adjustments, it said.
Magnus produced last year at an average daily gross rate of 17,000 barrels of oil equivalent, according to company figures.
Cash-strapped BP has been aggressively divesting assets in the wake of a massive oil spill in the Gulf of Mexico in 2010, which saddled it with liabilities worth billions. Among them was its 950,000-cbm storage terminal at Amsterdam to Zenith Energy and its 200,000-cbm storage and logistics assets at Pernis, in the port of Rotterdam, to Koole Terminals.
“Sullom Voe and Magnus have been great businesses for BP, but to maximize the economic life of these important assets, we believe this deal will offer them a better long-term future,” BP said in a statement, pointing to its strategy of selling mature assets “to those who see greater strategic fit with their businesses.”
The group said it would continue to invest in the west-of-Shetland projects Clair Ridge and Quad204, following its regional focus in recent years on what it perceived as “core assets” west of Shetland and in the central North Sea.
BP had already passed on operatorship to EnQuest on the Thistle, Deveron and Don fields.
