IOG gains more time to close Southern North Sea pipeline buy
Independent Oil and Gas (IOG) has moved closer to signing the sale and purchase agreement (SPA) for the UK Southern North Sea (SNS) pipeline which is expected to be used to deliver the company’s gas to shore.
To remind, the company signed a memorandum of understanding for the acquisition of the currently disused pipeline in the Southern North Sea on January 16.
As part of the deal, IOG would assume operatorship of the pipeline at completion and the liability for future decommissioning as well as acquire related onshore facilities.
IOG said on Friday that the deal is nearing its final form and should be signed by all parties shortly.
Accordingly, the memorandum of understanding which includes exclusivity provisions for the pipeline was extended by two weeks until April 13, 2017.
The company added that all parties were working hard to get this document signed as soon as possible.
IOG intends to use the pipeline as a direct export route for the company’s gas from Southern North Sea assets into the UK market. The pipeline is currently disused and will be acquired for a nominal consideration.
The plan is to re-commission the pipeline to enable evacuation of the gas from both the Blythe and Vulcan Satellites hubs. Also, with 300,000 million cubic feet per day capacity, the pipeline could accommodate export of resources from the Harvey discovery, if an appraisal well is successful.
IOG believes that there may be potential for third parties to use the pipeline in which case the company would benefit from tariff income.
Upon the closing of the SNS pipeline deal, it will be 100 percent owned by IOG like all licenses which the company has in its portfolio.