Swiss-based Ineos hopes to close a deal to buy UK North Sea gas fields from German-based DEA Group by the end of the year, a spokesman said Monday.
Ineos reached an agreement to acquire the assets over the weekend in a deal that is subject to approval from EU regulatory authorities.
The assets that Ineos Upstream will purchase, which account for 8% of the UK's gas production, include the Breagh and Clipper South fields in the southern North Sea and are close to the company's petrochemical sites in northeast England and Scotland.
Ineos's proposed acquisition comes as it seeks new sources of cheap gas.
"We have been quite open about our intention to expand the upstream business and the North Sea fields offer opportunities for our chemicals business and refining joint venture," the spokesman said. "We are probably one of the world's largest consumers of gas and these purchases will make a significant contribution to our European production and feedstock strategy."
Although a new entrant to the North Sea gas market, Ineos has in recent years formalized plans to acquire cheap LPG and gas feedstocks, including natural gas, ethane, propane and condensates -- for its petrochemical plants, following the prominence of shale gas as a competitive alternative to oil-based naphtha.
Within this, it recently acquired shale gas licenses in England and Scotland and invested a further $1 billion in a project to bring US shale gas to the UK and to its Rafnes facility in Norway.
That has included upgrading its plant and logistics facilities, as well as commissioning vessels adapted to ship LPG cargoes.
Once the transaction has been finalized, the platforms, infrastructure and its employees will form part of a new INEOS Upstream business division which will be based in London.
The owner, German-based DEA Group was forced to sell after UK Secretary of State for Energy, Ed Davey, told DEA's owner, Russian investment vehicle LetterOne, on April 20 that he would revoke the North Sea petroleum licences of DEA UK, the group's UK arm, unless LetterOne arranged for a further change of control of the DEA UK gas fields in the North Sea.
LetterOne is owned by Russian billionaire Mikhail Fridman.
Controlled by Russia's Alfa Group, Luxembourg-registered LetterOne Holdings was set up in 2013 to build a portfolio of global energy assets. Its oil and gas arm, L1 Energy, is managed by former BP chief John Browne.
The UK government said, after it notified LetterOne it must sell the North Sea fields, that the threat of future sanctions on Russian entities might jeopardize the security of UK offshore production and, therefore, it would not allow Russian-owned LetterOne to operate UK assets.
