DONG Energy has agreed to sell its oil and gas portfolio to petrochemicals firm, Ineos for $1.3bn.
Danish utility giant and wind farm developer, DONG Energy has announced the sale of its oil and gas business for $1.3bn. Ineos, a multinational chemicals company will now take over its portfolio despite strong interest from shipping group, A.P. Moller-Maersk who had planned to merge the two company’s assets.
Talks had stalled between DONG and A.P. Moller-Maersk, with Chief Executive of Maersk, Soren Skou stating at the start of the year that the firm is more likely to list its energy units separately.
Nordic financial services group, Nordea said the $1.3bn was below expectations, a sentiment shared by Alm Brand Bank analyst, Michael Friis Jorgensen who said: "DONG's sales process, which has resulted in a price in the low end of expectations, shows that it is not easy to sell oil and gas activities in the North Sea in the current oil environment.”
Last month, Ineos acquired the Forties pipeline system in the North Sea from BP and already owned the Grangemounth refinery in Scotland, with the company looking to grow its exploration and production sector.
Three of the major assets included in this latest deal are the Ormen Lange, Syd Arne and Laggan-Tormore fields. Ineos will also take over the Hejre field which had its development halted over a year ago; it is estimated the field holds 171 million barrels of oil and the firm will be looking at options to extract these reserves.
Commercial activity in the North Sea has increased in 2017 with the help of stable oil prices. Chrysaor and Siccar Point are two firms which have joined Ineos in acquiring large assets, securing deals with operators such as Royal Dutch Shell and OMV. Neptune Oil & Gas also agreed to take a majority stake in Engie’s exploration and production arm this month, in a deal worth $3.9 billion.
Last year, 100,000 barrels of oil and gas were produced by DONG, daily, a decrease from 115,000 in 2015. However, DONG is making significant efforts to end its use of fossil fuels and plans to generate 100% of its energy from offshore wind farms.
DONG Chief Executive, Henrik Poulsen said: "The transaction completes the transformation of DONG Energy into a leading, pure play renewables company."