EMEA: Antin agrees north sea pipeline deal

11 December 2017 - 12:00 am UTC

Energy companies Premier Oil, Centrica and Perenco have agreed to sell their stakes in the Esmond Transportation System (ETS) to Antin-backed CATS.

Announcing the deal on Monday (11 December), Premier Oil said it would receive GBP 23.6m for its 30% stake in the North Sea Pipeline. Centrica owns a further 25% and Perenco 10%, bringing CATS’ total acquisition to 65% of ETS.

Antin Infrastructure Partners set up its North Sea midstream infrastructure platform CATS when it acquired the Central Area Transmission System in 2014.

The ETS pipeline was built to transport gas from Esmond Area fields off Teesside – which has long been decommissioned – to the Bacton gas terminal in North Norfolk. It is now used by other fields, primarily Trent and Tyne fields, which are part-owned and operated by Perenco. This means Perenco currently operates ETS.

Engie and Centrica’s Cygnus gas field off the coast of Lincolnshire, which began production early this year and has an expected life of 20 years, also uses ETS.

Premier sold the asset as it was non-core, and it does not use the pipeline.

Jefferies advised the energy companies on the sale.

Engie holds a 25% stake in the pipeline, and ConocoPhillips 10%. 

The new owner and the operator will equally share abandonment costs – sinking the pipeline at the end of its life, a measure Premier estimates will cost around GBP 20m.

Premier forecasts that the pipeline will need around GBP 10m of maintenance work in 2026, according to investor relations documents. Under the existing contracts, this means users will pay 50% of the tariff for an eight-year period.

Antin and its co-investors in CATS are investing heavily through the platform. They plan to develop greenfield infrastructure for Premier’s Tolmount gas field, and are bidding to acquire a majority stake in Teesside Oil Terminal. 

Premier expects the sale to close in the first half of 2018, subject to regulatory approvals.