Swiss chemicals giant Ineos has bought its first British North Sea gas fields from Russian billionaire Mikhail Fridman’s investment fund LetterOne, outlining plans to further expand its energy resources to supports its petrochemical business.
The deal ends a standoff between Fridman and the British government that gave him six months to dispose of the UK assets LetterOne had acquired from German utility RWE, or see their licences revoked as the West tightened sanctions against Moscow over its role in the Ukraine.
The sale was estimated at around $750 million according to banking sources, which fell short of LetterOne’s initial target of $1.2 billion.
Britain has told Fridman he was still welcome to invest in the country.
Ineos said the gas assets, which include the Breagh and Clipper South fields, provide up to eight per cent of Britain’s requirements and that it would seek more.
“INEOS has been very open about its intention to make strategic investments in the North Sea and this acquisition is our first step in fulfilling this goal. It will also help our UK petrochemical assets to have ongoing access to competitive energy,” INEOS chairman Jim Ratcliffe said in a statement.
For LetterOne, the sale will allow it to focus on its plans to acquire further assets in Europe and North Africa, a spokesman said. He would not comment on the value of the deal.
LetterOne emerged as the frontrunner for the acquisition of German utility EON’s Norwegian North Sea assets, banking sources told Reuters last week.
Ineos operates Scotland’s largest manufacturing complex at the Grangemouth refinery and petrochemical plant, the destination of a pipeline from North Sea fields.
Last year, Ineos announced plans to invest $1 billion in British shale gas exploration using fracking technology with an ambition to become the country’s biggest shale gas player.
The offshore gas assets would complement any onshore production, it said.
Ineos also said on Sunday that it has set up a new oil and gas subsidiary, Ineos Upstream in order to conduct a strategic review of the potential opportunities in the North Sea.