North Sea oil return for Lord Browne with plan to soak up unwanted assets

FORMER BP chief executive Lord Browne of Madingley is understood to be working on a plan to consolidate North Sea assets using a possible partial bid for producer Fairfield Energy as a platform.

Lord Browne, 64, an oil industry veteran who now runs the European business of Riverstone, a US investment fund, is said to be in advanced negotiations with private equity firm Warburg Pincus, which owns Fairfield.

Industry sources say Riverstone is looking initially to buy up to 50 per cent of Fairfield and then use it as a vehicle to buy any non-core assets put up for sale by large North Sea players, including BP and Shell.

Both BP and Shell recently reaffirmed their commitment to the North Sea despite the additional UK government tax rise on production, but they are known to be prepared to consider offers for specific fields if the price is right.

BP has put the southern North Sea gas field, off the coast of Lincolnshire, up for sale because gas prices have plunged. That is part of a £28 billion global asset sale plan that group chief executive Bob Dudley has launched to help pay for the Gulf of Mexico disaster.

A BP spokesman said yesterday: “We are disposing of some assets and investing in others. This latest story [regarding Browne] seems speculative at present.”

A spokesman for Shell declined to comment.

City oil analysts said it was difficult to estimate how much Riverstone might have to fork out for Fairfield, which tried to float on the London stock market two years ago with a valuation of £630 million. The float was pulled at the eleventh hour.

It is said that, if Browne pulls off the planned foray, then Riverstone and Warburg – with £30bn under management jointly – could fund an acquisition spree.

The former BP chief’s potential intervention would be seen as a shot in the arm for the oil and gas industry. In 2011, output in the North Sea was less than half the 4.5 million barrels a day that it produced at its peak in 1999.

Several other rivals are also said to be considering asset sales there as fields dry up. The alternative is to spend hundreds of millions of pounds shutting the fields down and cleaning them up.

Browne resigned from BP in 2007 after revelations about his private life, to be succeeded by protégé Tony Hayward. He quit after the uproar associated with the Deepwater Horizon well explosion in the Gulf of Mexico, in which 11 men died and which saw several million barrels of oil flow out into the Gulf.