UK oil and gas giant BP has agreed to buy JX Nippon’s interests in the Andrew area located in the UK North Sea only days after the latter agreed to sell its other UK North Sea assets to NEO Energy.
A spokesperson for BP told Offshore Energy that JX Nippon’s interests in the Andrew Area comprise 27.39 per cent interest in the Andrew field, 30 per cent interest in the Farragon field, and 22.94 per cent interest in the Kinnoull field. The value of the deal has not been disclosed.
The spokesperson also said: “We announced earlier this year that we would retain the Andrew area in our North Sea portfolio and run it as an exemplar late-life asset through to the cessation of production, planned for 2026. Our purchase of JX Nippon’s interest provides more influence over decision-making to drive the efficiencies needed to make this late-life business model a success.”
The deal between BP and JX Nippon is anticipated to be completed during 1Q 2022, subject to receipt of the UK regulatory and other relevant third-party approvals. The company has been looking to sell some of its assets in the UK North Sea – including stakes in the Andrew, Culzean, and Mariner projects – since earlier this year.
Just last week, NEO Energy signed an agreement with JX Nippon to acquire 100 per cent of the share capital of JX Nippon Exploration and Production (U.K.) Limited for about $1.7 billion.
The deal included JX UK’s non-operated interests in multiple producing fields and associated infrastructure in the UK North Sea, consisting of a 20 per cent interest in the Mariner field and an 18 per cent interest in the Culzean field. However, the transaction excluded JX UK’s interests in the Andrew Area, which has now been bought by BP.
The transaction is part of JX Nippon’s ongoing global portfolio management strategy to strengthen its upstream portfolio by selling projects that are no longer critical to the business.
BP in early 2020 tried to sell the Andrew Area and Shearwater assets to Premier Oil for $625 million. This was before Premier Oil’s merger with Chrysaor, which formed Harbour Energy. BP and Premier later that year changed the deal and lowered the price to $210 million. However, it all fell through in October 2020 when Chrysaor stepped in with a plan to merge with Premier .
Come January 2021 and reports emerged that BP relaunched the sale of its North Sea assets it previously tried to sell to Premier Oil but it was said that the assets were unlikely to exceed $80 million due to the low oil price environment at the time. Now, BP has committed to retaining the Andrew area.