Total considers sale of Frigg gas pipeline in UK’s North Sea
By DINESH NAIR, RUTH DAVID and TARA PATEL
Bloomberg
Total, Europe’s second-biggest oil company, is considering a sale of its gas pipeline in the UK North Sea as it seeks to offload assets amid a drop in oil prices, three people with knowledge of the matter said.
The French company has reached out to several potential buyers for the Frigg network, which could fetch about $1 billion, two of the people said, asking not to be identified as the information is private.
A sale may draw interest from pension funds seeking stable returns and energy-focused private-equity firms, they said.
Total CEO Patrick Pouyanne has said he will curb spending and quicken the pace of asset sales after the price of crude oil crashed to six-year lows. The company wants to raise $5 billion through disposals this year, and is targeting a total of $10 billion through 2017.
The French company may decide to sell all of the Frigg pipeline or a majority stake in the asset, depending on buyer interest, the people said.
It is already exploring the sale of part of the Laggan-Tormore natural gas field, which lies west of the Shetland Islands, one of the people said. Total operates and has an 80% stake in the project, which is about a year behind its original production schedule. The company may also sell a 20% stake in Nigeria’s Usan field.
A representative for Total declined to comment.
As crude prices hover around $45/bbl, other oil companies have also been offloading pipeline assets in the North Sea. BG Group agreed to sell its 63% interest in a gas pipeline for 562 million pounds ($834 million) to Antin Infrastructure Partners in June last year.
Tax Cuts
UK Chancellor of the Exchequer George Osborne used his final annual budget this week to cut taxes on North Sea oil, reducing a supplementary levy so producers will pay a total of 50% tax on profit, down from 60%.
The drop in oil prices has rendered as much as a third of UK fields uneconomic, BP CEO Bob Dudley said in February. Taxes and production costs meant cash flows for operators were a negative 5.3 billion pounds last year, according to Malcolm Webb, head of the Oil & Gas UK lobby.
The Frigg UK System, which covers about 362 kilometers (225 miles), transports natural gas from fields across the North Sea to St. Fergus in Scotland. Completed in 1977, Frigg -- which shares its names with a Norse goddess renowned for her wisdom -- is 100% owned by Total’s E&P UK unit.
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