Asco secures contract with BP in North Sea

George Osborne unveiled 1.3bn package for the North Sea industry. Picture: PA
George Osborne unveiled 1.3bn package for the North Sea industry. Picture: PA
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OILFIELD services company Asco, a major North Sea employer, yesterday announced a £100 million-plus contract to support BP’s North Sea operations over the next five years.

Under the deal, Asco will provide activities including warehouse operations, waste management and freight forwarding services.

The company, owned by private equity outfit Doughty Hanson and members of the management team, already provides a number of services to BP but the new contract brings them together under one agreement.

Craig Lennox, chief executive for Europe at Asco, said: “We are pleased to be building on a client relationship that spans more than 20 years. Maintaining this strong and successful connection with BP is a great achievement and we look forward to safely and efficiently delivering on this key contract.”

Asco employs just over 900 at various sites in Scotland, with around 500 in Aberdeen where most of the services under the contract will be handled.

The company also has bases at Peterhead and Scrabster.

Although the oil price fall has impacted its clients in the North Sea, Asco’s group chief executive Alan Brown said there were also opportunities emerging,

“The really big opportunity for our clients is to work together to share assets in the North Sea, as advocated by the Wood Report. Asco is well placed to facilitate asset sharing given that we support over 80 per cent of the North Sea operators across the quaysides in Peterhead and Aberdeen. We intend to take a leadership position on this opportunity,” said Brown.

Yesterday’s contract announcement was the second major deal Asco has announced with BP in recent weeks. In February it won a supply base contract for BP’s Great Australian Bight Exploration programme.

The supply base at Finders Port in Adelaide will be managed by the company in partnership with Finders Logistics. Beginning in 2016, BP’s exploration program will include four wells within its offshore permits, which are located 300 kilometres southwest of Ceduna, South Australia.

Last year Asco agreed a £40m funding package to drive further overseas expansion and a push into new areas.

Latest annual financial figures showed a 13.3 per cent rise in total revenues to £768.6m. Operating profits for the year to 31 December leapt by 158 per cent to £14.8m.

The latest contract award is in contrast to a slew of negative news in the North Sea sector as it continues to struggle with the impact of the fall in the oil price.

Reports at the weekend suggested German energy giant E.ON was the latest major company to be pulling out of the North Sea, with plans to sell £1 billion of assets despite the package of support measures for the oil and gas outlined in last week’s Budget.

It is understood E.ON has instructed Bank of America Merrill Lynch to find buyers for its interests, spread out across the various sectors of the North Sea.

The assets will join a crowded marketplace with about £6bn-worth of stakes in fields and licences already on offer from supermajors such as BP, , Shell and Total. Some large firms had been exiting UK waters even before the dramatic collapse in o ConocoPhillips il prices from more than $100 a barrel last summer to less than $60 today. With production in decline and many fields maturing, UK waters are increasingly being drilled by smaller, specialist firms.

Hundreds of jobs have already been axed amid the slide in Brent crude prices and thousands more remain at risk, but industry leaders believe the outlook would have been much more bleak had George Osborne not announced a £1.3bn package of tax breaks on Wednesday.

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