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UK's Ineos in talks to buy ConocoPhillips North Sea assets

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UK's Ineos in talks to buy ConocoPhillips North Sea assets

London — Chemicals and energy group Ineos is holding exclusive talks to buy US upstream company ConocoPhillips' North Sea assets in a move that would expand the UK company's gas-focused portfolio.

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ConocoPhillips said in a statement Monday it was in "exclusive negotiations" with Ineos for its UK assets, excluding the Teesside oil terminal and London-based trading organization, and Ineos confirmed the talks.

Ineos, which owns the Forties crude pipeline and, with state-owned PetroChina, Scotland's Grangemouth refinery, has been on an upstream buying spree, purchasing the UK assets of Russian-owned DEA in 2015 and the North Sea business of Denmark's DONG Energy last year.

The ConocoPhillips assets produced 67,000 b/d of oil equivalent in the third quarter, of which 40% was liquids and 60% gas. The portfolio should get a boost with the start of oil production from the BP-operated Clair redevelopment, which has been severely delayed but is due on stream by year-end.

ConocoPhillips is set to hold 7.5% of Clair following a swap with BP that will boost the former's Alaskan holdings, part of the US firm's retrenchment to the US following the oil price crash.

If successful the purchase would underline Ineos owner Jim Ratcliffe's commitment to North Sea gas and associated chemicals production, particularly in the UK. Ineos has also been battling Scottish authorities, unsuccessfully, for the right to develop shale gas. He has been a strong supporter of the UK's Brexit from the EU.

Ineos' current UK portfolio mixes relatively low-cost production from the shallow waters of the southern North Sea, acquired from DEA, and deepwater production from the Total-operated Laggan-Tormore complex in the West of Shetland area.

Prospects for Laggan-Tormore, which came on stream in 2016 and was due to meet almost 10% of UK gas demand, got a further boost when Total announced the "major" Glendronach gas find in the same area in September. Ineos holds a 20% stake in the Laggan-Tormore area.

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In January, Ineos put its total upstream production from Denmark, Norway and the UK at 95,000 boe/d.

--Nick Coleman, nick.coleman@spglobal.com

--Edited by Maurice Geller, newsdesk@spglobal.com