Independent Oil & Gas to buy Thames pipeline in North Sea

Independent Oil & Gas is to buy the recently decommissioned Thames gas pipeline in the southern North Sea from Perenco UK, Tullow Oil SK and Centrica Resources, for a “nominal consideration”, subject to regulatory consent.

The pipeline will enable the company to export about 300,000 cubic feet per day in gas from its assets in the southern North Sea, the Blythe and Vulcan Satellite hubs, to the Bacton gas terminal.

The acquisition will give the company complete control from field to market and enable it to deliver up to half a trillion cubic feet of gas resources to the UK market for 15 to 20 years starting from the end of next year.

No tariff will be payable for the transportation of the gas to Bacton, but a processing tariff will be payable to Perenco, the terminal owner.

Completion of the deal 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, which is estimated to be about £500,000.

Once completed the company will export gas from the Blythe and Vulcan satellite hubs, which require an estimated maximum throughput of about 150m cubic feet per day, which is well within the pipeline's anticipated capacity, so it could have sufficient capacity to also export gas from the Harvey discovery.

Ahead of first gas export, the Company is also aiming to buy the onshore reception facilities at the Perenco Bacton terminal and a period of exclusivity has been agreed until the end of September 2018.

IOG chief executive and interim chairman Mark Routh said: "We acquired most of our southern North Sea 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.

“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."

Shares in Independent Oil & Gas were down 2.1% to 17.99p at 0952 BST.