Scottish Gas owner Centrica has struck an agreement to combine its European oil and gas exploration and production (E&P) divisions with Norway-based producer Bayerngas Norge as part of a joint venture.
Under the terms of the deal, Centrica will hold 69 per cent in the new company and Bayerngas will have 31 per cent. The new entity will contain Centrica’s assets in the UK, Netherlands and Norway and Bayerngas Norge’s in Norway, the UK and Denmark.
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Centrica said the deal “combines a complementary mix of producing and development assets with strong positions” and said synergies from costs savings and portfolio optimisation were expected to be in the order of £100-150 million.
It also said there were opportunities to strengthen the business through further consolidation and joint ventures, including the potential for an initial public offering in the medium term.
Iain Conn, chief executive of Centrica, said: “This joint venture creates a larger, more sustainable and more capable European E&P business and brings together like-minded shareholders who have a shared strategic vision on the role of E&P.
“As one of the largest independent E&P companies in north-west Europe, the new entity will have the possibility to participate in further consolidation and joint ventures.”