The Press and Journal (Aberdeen and Aberdeenshire)

Investors have ‘huge appetite’ for North Sea infrastruc­ture

Oil and gas: ‘Money burning pockets’

- BY KEITH FINDLAY

There is currently a “massive appetite” for UK North Sea infrastruc­ture among potential investors, an oil and gas expert said yesterday.

Mark Andrews, head of oil and gas for KPMG in the UK, said private-equity firms and specialist infrastruc­ture funds were circling the market.

KPMG has received a lot of inquiries from potential buyers with “money burning a hole in their pockets”, he added.

Mr Andrews, who is based in London, said: “We have already seen some deals as people move into this space but there has not been the raft we might have expected.” But North Sea infrastruc­ture investment is likely to be a growth area during 2017 as operators take advantage of an opportunit­y to free up cash, he said, adding potential investors were attracted by the relatively low levels of risk in a market led by creditwort­hy oil firms.

Core infrastruc­ture is essential to the future of the UK North Sea, particular­ly the developmen­t of socalled “small pools” of reserve, so it is crucial it is preserved and maintained.

Recent infrastruc­ture deals include North Sea Midstream Partners’ acquisitio­ns of the Frigg UK and Shetland Island Regional Gas Export System pipelines from Total and Antin Infrastruc­ture Partners’ purchase of the Central Area Transmissi­on System. These deals resulted in infrastruc­ture firms owning all, or nearly all of the assets.

Mr Andrews said the North Sea mergers and acquisitio­ns market was also likely to be busier this year as the gap between buyers’ and sellers’ expectatio­ns narrows.

He highlighte­d recent

“Already seen deals as people move into this space”

deals involving North Sea newcomer Siccar Point, which snapped up assets from OMV and JX Nippon Exploratio­n and Production during 2016, as an example of the kind of transactio­ns he expected to see more of this year.

“We are seeing a number of those type of organisati­ons now coming to the fore,” he added.

And in the UK North Sea, he said BP’s plans for 2017 and beyond, including it completing the multibilli­on-pound Quad 204 project west of Shetland and second phase developmen­t of the giant Clair field, were a “vote of confidence” in the basin’s prospects. Yesterday marked the first anniversar­y of the lowest Brent crude oil price of 2016 – under $28 a barrel.

He said the future direction of oil prices was too difficult to predict with any degree of certainty but the industry globally was “feeling a lot more positive”.

 ?? Photograph: Colin Rennie ?? EXPERT: Mark Andrews, head of oil and gas for KPMG.
Photograph: Colin Rennie EXPERT: Mark Andrews, head of oil and gas for KPMG.

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