JX Nippon Oil and Gas Exploration Corp., a unit of Japan’s biggest refiner, said it will make a “sizable investment” in U.K. offshore oil and gas fields after agreeing to buy North Sea assets from Italy’s Eni SpA. (ENI)
JX Holding Inc. (5020)’s oil exploration unit expects output of 40,000 to 50,000 barrels of oil equivalent per day by the end of the decade from the investments, which include a 28.89 percent stake in the undeveloped Mariner field, the Tokyo-based company said today in a statement. An Eni official declined to comment on the deal.
“We’re paying significant money for the equity and then we’re also spending money to develop” the assets, David Nash, executive director of JX Nippon Exploration in the U.K., said by phone from London. Some of the assets are subject to pre-emptive accords with existing shareholders, he said.
JX is adding fields overseas to lessen its exposure to rising energy prices. The company plans to produce 200,000 barrels a day by the end of the decade. Today’s deal may boost production almost 40 percent from the 130,000 barrels per day the company pumped from assets in 14 countries last year, the company said.
Today’s deal is the latest sale of North Sea asset disposals by the largest European oil companies. Last week, BP Plc (BP/) said it was selling a 50 percent stake in the Sean gas field to SSE Plc for $288 million in cash, bringing its total sell-off in the region to more than $3 billion. In November, BP agreed to sell interests in several fields to Abu Dhabi National Energy Co. (TAQA) for $1.1 billion.
Under the terms of the deal with Eni, JX will also boost its stake in the Culzean gas condensate development to 34.01 percent from 17.07 percent and become a parter in the Flotta Catchment Area, which includes the Claymore field, JX said.
Malcolm Webb, chief executive officer of Oil & Gas U.K., said it welcomed “an active and lively market in U.K. assets which encourages companies to invest here.”
“Engagement with the Treasury over the last 18 months has brought forward several measures designed to promote investment, such as tax allowances for new and existing projects with difficult economics,” Webb said.