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Neptune Buys North Sea Gas Assets Worth Billions

Yesterday, private-equity backed UK-based firm Neptune struck a deal to buy the North Sea gas assets of French Engie along with other operations for US$3.9 billion.

The firm, ran by the former chief executive of British utility Centrica Sam Laidlaw, was given US$5 billion by Carlyle Group and CVC Capital Partners back when it was set up in 2015, and the Engie deal has been in the making for over a year. As part of the final binding offer, Neptune will take on Engie’s decommissioning liabilities, which are estimated at around US$1.2 billion (1.1 billion euros).

In addition, the Chinese Investment Corporation, which owned a 30-percent stake in the upstream business, will increase its interest to 49 percent.

The French company, formerly known as GDF Suez, put its upstream business on the block last year, including 319 E&P licenses not just in the North Sea but also in Norway, Algeria, and Indonesia, along with nine other countries. The biggest of Engie’s 16 assets in the North Sea is the Cygnus field, which produces about 5 percent of the overall UK gas output. Engie operated the field in partnership with Centrica.

The overall production of the French company’s upstream business is 148,000 barrels of oil and oil equivalent, as of 2016. The proven and probable reserves in its portfolio are estimated at 672.4 million barrels.

Related: Does This Oil Price Rally Have Legs?

Engie, however, is reorienting itself towards renewables and has no reason to consider the oil and gas production business core anymore. According to chief executive Isabelle Kocher, as quoted by the FT, the sale was “a major milestone” along the way to an all-renewable Engie.

Neptune is the third in a string of private equity-backed firms to set a firm foot in the North Sea, after Chrysaor and Siccar Point bought North Sea projects from, respectively, Shell and Austria’s OMV.

By Irina Slav for Oilprice.com

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