INEOS Buys DONG's Oil and Gas Business for $1.3 Billion

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--U.K. petrochemicals major INEOS (London) continued its drive into new markets with its decision to purchase the oil and gas business from DONG Energy A/S (Fredericia, Denmark) for $1.3 billion.

The company, which has been expanding into the oil and gas sector in recent years, will pay $1.05 billion for DONG E&P A/S, a contingent payment of $150 million related to the Fredericia stabilisation plant and a contingent payment of up to $100 million subject to the development of the Rosebank field. Industrial Info reported last year on DONG's decision to get out of the oil and gas business as part its plan to focus solely on offshore wind. DONG is currently Europe's largest offshore wind energy company. For additional information, see November 10, 2016, article - DONG To Exit Oil and Gas Sector.

The business produced 100,000 barrels of oil equivalent per day (boepd) in 2016 and has about 570 million boe of commercial and potential oil and gas reserves across the Danish, Norwegian and U.K. continental shelves.

On completion, 440 people will transfer to INEOS, working across a portfolio of production, development, exploration and appraisal assets. DONG's oil and gas portfolio is built around three key fields; Ormen Lange is the largest field in the portfolio and the second-largest gas field in Norwegian waters, Laggan-Tormore is a new gas field West of Shetland, which came on-stream early 2016, and Syd Arne is a large oil field in Denmark.

"DONG Energy's Oil & Gas Business is a natural fit for INEOS as we continue to expand our Upstream interests," said Jim Ratcliffe, INEOS Chairman. "This business is very important to us at this stage of our growth plans and we are delighted with the expertise that comes with it. We have been successful in our petrochemical businesses...and we intend to do the same with our oil and gas assets."

Henrik Poulsen, chief executive officer of DONG Energy, said: "Since the decision in 2016 to divest our upstream oil and gas business, we've actively worked to get the best transaction by selling the business as a whole, getting a good and fair price for it and ensuring the optimal conditions for the long-term development of the oil and gas business. With the agreement with INEOS, we've obtained just that. The transaction completes the transformation of DONG Energy into a leading, pure play renewables company."

INEOS' Upstream business was formed in 2015 on the acquisition of both DEA's and part of Fairfield's U.K. portfolio. Last month, INEOS announced that it had also agreed to acquire the Forties Pipeline System (FPS) and associated pipelines and facilities from BP for $250 million. The 235-mile Forties pipeline system links 85 North Sea oil and gas assets to the U.K. mainland and the INEOS site in Grangemouth in Scotland. On completion of the deal, the ownership and operation of FPS, the Kinneil terminal and gas processing plant, the Dalmeny terminal, sites at Aberdeen, the Forties Unity Platform and associated infrastructure will transfer to INEOS. The assets deliver almost 40% of the U.K.'s North Sea oil and gas.

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