UK-based Independent Oil and Gas has signed memorandum of understanding (MoU) to acquire a 100% interest of the currently disused pipeline in the Southern North Sea for a nominal consideration.
The acquired pipeline will give the company an export route for its Southern North Sea assets.
The MoU contains exclusivity provisions until 28 February this year.
Concerned parties are currently negotiating provisions of sale and purchase agreement (SPA).
After completion of the SPA, Independent will assume operatorship of the pipeline and the liability of future decommissioning. Under the SPA, Independent will also purchase associated onshore reception facilities.
Independent Oil and Gas CEO Mark Routh said: “This pipeline will be the cornerstone of our Southern North Sea portfolio which, subject to remediation, will enable us to deliver our approximately 0.5 trillion cubic feet of gas resources to the UK market.
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"During a period of relatively low gas prices, we have bought, at very attractive prices, quality assets, which were considered effectively stranded. Subject to completion of the acquisition, full ownership and control of the export route creates significant value for the company, especially given the recovery in UK gas prices.
"Owning our gas portfolio and export infrastructure 100% will enable us to accelerate both the development planning and funding processes.”
Independent intends to conduct an intelligent pigging inspection to ensure the pipeline’s integrity for safe re-use after the completion of the deal. The company will then recommission the pipeline to transport gas from both its Blythe hub and Vulcan Satellites hub.
Recommissioning will require installation of inter-field pipelines and tie-in points.
The pipeline will carry a capacity of 300,000 million cubic feet per day, which can also be used to transport gas recovered from Harvey discovery, subject to further appraisal.
This acquisition holds considerable strategic value for the company’s SNS gas development portfolio by enabling it to enter the UK market.
It can also be used by third-parties, giving Independent the opportunity to earn a tariff.
The acquisition carries a nominal consideration with Independent agreeing to bear any liabilities for future decommissioning of the pipeline and reception facilities.