x Abu Dhabi, UAESunday 23 July 2017

Abu Dhabi's Taqa buys North Sea oilfields from BP for $1bn

The purchase of BP’s assets increases Taqa’s worldwide crude production by 21,000 barrels per day (bpd) to more than 60,000 bpd.

The purchase of BP’s assets increases Taqa’s North Sea crude production by 21,000 barrel per day (bpd) to almost 60,000 bpd. FILE PHOTO
The purchase of BP’s assets increases Taqa’s North Sea crude production by 21,000 barrel per day (bpd) to almost 60,000 bpd. FILE PHOTO

The Abu Dhabi National Energy Company, commonly known as Taqa, has bought BP oilfields in the North Sea for more than US$1 billion (Dh3.67bn), increasing its crude production by half.

The deal comes as a controversial tax rise for oil companies operating in the United Kingdom is being offset by new tax breaks, and indicates that a sustained effort by the British government to encourage Arabian Gulf investments in the country is paying off.

“This investment shows our commitment to the future of the North Sea. It is underpinned by the UK government’s commitment to long-term fiscal stability,” said Hamad Al Hurr Al Suwaidi, the chairman of Taqa and a member of Abu Dhabi’s executive council.

The purchase of BP’s assets increases Taqa’s worldwide crude production by 21,000 barrels per day (bpd) to more than 60,000 bpd.

Taqa is buying majority stakes in the Harding and Devenick fields, and a minority interest in the Maclure field, all of which lie in the Central North Sea.

The Abu Dhabi company is also buying into pipeline infrastructure. The deal will be completed by the end of the second quarter next year.

The $1.058 billion acquisition was met with approval by the UK government, which is eager to strengthen the commercial ties between Great Britain and Gulf countries.

“I’m delighted that following my recent visit to Abu Dhabi to spearhead greater commercial ties, Taqa has decided to invest in their North Sea operations,” said David Cameron, the UK prime minister.

The British government has called into life two initiatives, the UK-UAE Taskforce and the Joint Economic Committee, to facilitate deal making and investment.

Mr Cameron visited the UAE this month, and during his stay found time to meet Taqa’s management to discuss the deal with BP. At the meeting, the prime minister assured the Abu Dhabi investor over the new tax status of North Sea oilfields.

Taqa already holds substantial assets in the North Sea, where it operates under its Taqa Bratani subsidiary.

The company has been smarting under a tax rise imposed on the UK oil and gas sector from last year, and has been vocal about the effect it would have on future investments in the UK.

UK tax charges also contributed to the company’s disappointing third quarter performance, when a Dh272m one-off charge added to a net loss of Dh288m.

A new tax regime will now make it easier to offset decommissioning costs on spent oilfields, an important measure for companies operating the mature assets in the North Sea. It will also apply tax breaks to the development of new and existing fields.

“It is something that compensates for the changes that were made in 2011, when the rate of corporate tax for oil companies in the UK was increased,” said Carl Sheldon, the Taqa chief executive.

Taqa, which is listed on the Abu Dhabi Stock Exchange, owns all of the emirate’s power plants, and has branched out into oil and gas production, as well as power generation, abroad. Apart from its North Sea assets, it operates in gasfields in Canada, and is completing a gas storage project in Bergermeer, Holland.

BP is operating in the Adco concession in Abu Dhabi, which produces the emirate’s onshore oilfields. The concession is up for renewal in 2014, and the UK oil major has been excluded from a preliminary list of companies considered for the upcoming licensing round.

The deal with Taqa was a rare bright spot for BP yesterday as its shares plunged after the US temporarily suspended the company from all government contracts.

fneuhof@thenational.ae