Independent Oil and Gas plc Acquires SNS Pipeline
Independent Oil and Gas plc, the development and production focused Oil and Gas Company, is pleased to announce it has signed a Sale and Purchase Agreement ("SPA") regarding the acquisition of the recently decommissioned Thames Gas Pipeline in the Southern North Sea ("SNS") for a nominal consideration from Perenco UK Limited, Tullow Oil SK Limited and Centrica Resources Limited. The pipeline will provide the proposed export route for IOG's Southern North Sea assets.
- The strategically important pipeline will allow the Blythe and Vulcan Satellite hubs to export gas to the Bacton Gas Terminal.
- Estimated initial capacity of the 24-inch Thames pipeline is 300 million cubic feet per day ("MMcfd").
- IOG will own 100% and operate the pipeline giving the Company control from field to market.
- No tariff will be payable for the transportation of the gas to Bacton. A processing tariff will be payable to Perenco, the terminal owner.
- Completion is subject to regulatory consents and provision of security to Perenco to cover the cost of additional pipeline integrity surveys that may be required in the future (estimated maximum cost of £500,000).
Upon completion of the acquisition IOG will undertake an intelligent pigging inspection to ensure the pipeline's integrity for safe re-use. When completed, the Company intends to export gas from IOG's Blythe and Vulcan Satellite hubs once they are in production. These two hubs require an estimated maximum throughput of approximately 150 MMcfd - well within the pipeline's anticipated capacity. The Company therefore expects the pipeline to have sufficient capacity to accommodate the export of gas from the Harvey discovery, subject to its successful appraisal.
Ahead of first gas, the Company intends to acquire the onshore reception facilities at the Perenco Bacton terminal. A period of exclusivity has been agreed until the end of September 2018. IOG anticipates using and upgrading the facilities in the meantime during the intelligent pigging works, subject to a Construction and Tie In Agreement ("CTIA") which is now being drawn up.
Under the terms of the acquisition additional security to be held by Perenco, the current Thames pipeline operator, for future decommissioning will be required before commencement of gas export (not expected to exceed £2.5 million including the pipeline integrity surveys). Additional security will be provided post completion of the onshore facilities, prior to first gas from IOG's gas hubs.Mark Routh, CEO and Interim Chairman of IOG, commented:
"I am delighted to have signed the Sale and Purchase Agreement for this strategically important acquisition. We acquired most of our SNS gas portfolio at low cost because the assets in this area were considered stranded without a viable export route. This acquisition allays those concerns and is therefore of great importance to IOG as we now have a route to market for our gas. Subject to completion and remediation it will enable us to deliver up to half a trillion cubic feet of gas resources to the UK market over a period of fifteen to twenty years from the end of next year. We are also open to work with third parties who may wish to use our export facilities for a tariff. We believe this is the kind of innovation required to breathe new life into the Southern North Sea and is entirely in line with the principles of Maximising Economic Recovery, as championed by the UK Oil and Gas Authority."