BP offloads North Sea assets to EnQuest in $85m deal

The deal will see EnQuest become operator of BP's Sullom Voe terminal. Picture: Contributed

The deal will see EnQuest become operator of BP's Sullom Voe terminal. Picture: Contributed

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North Sea producer EnQuest is to become the operator of BP’s Sullom Voe terminal in the Shetland Islands as part of an $85 million (£68m) deal with the oil major.

The firm said there would be no cash outlay under the agreement, which will also see it take a 25 per cent stake in BP’s Magnus oil field. Instead, the deal – which also gives EnQuest the option to buy the remaining 75 per cent of Magnus – will be funded by cash flow from the assets.

In addition, EnQuest has the option to receive $50m from BP in exchange for managing the physical decommissioning activities for the Thistle and Deveron fields.

READ MORE: BP commits to staying in North Sea for 40 years

Chief executive Amjad Bseisu said: “This transaction capitalises on EnQuest’s strengths in realising value from the management of maturing oil fields, as underlined by BP’s confidence in proposing a change of operatorship to EnQuest.

“Magnus is a good quality reservoir; it has large volumes in place, with potential for infill drilling and for the revitalisation of wells, and scope for field life extension. It is a producing asset that would materially increase EnQuest’s reserve base. We are a natural strategic partner to BP for maturing assets and this innovative structure represents a natural evolution of EnQuest’s business.”

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The deal will add 15.9 million barrels of oil equivalent to EnQuest’s reserves and boost its net production by 4,200 barrels per day, based on production figures for 2016.

Bernard Looney, chief executive of upstream operations at BP, said: “As BP continues to focus its North Sea portfolio around assets where we can add new capacity through disciplined investment in major projects, it is essential to partner with experienced operators like EnQuest to extend the life of existing mature assets like Magnus and Sullom Voe for the benefit of both companies and the region as a whole.”

READ MORE: EnQuest in £82m fundraising to support North Sea projects

Trade union Unite pledged to make sure the rights of BP workers were protected in any transfer to a new employer. About 100 BP staff are currently associated with Magnus and around 240 with the Sullom Voe Terminal.

Unite regional officer John Boland said: “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.

“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.”

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