Swiss Petrochemicals giant INEOS underlined its shale gas intentions after signing a multi-million-pound deal to increase its interests in the sector on both sides of the border.
The firm yesterday revealed a move to acquire at least a 50% working interest in seven shale gas licences belonging to IGas Energy.
The deal will see INEOS make an up front payment of £30m to London-headquartered IGas and also fund a two-phase work programme of up to £138m to appraise and develop the sites affected.
The agreement will see INEOS take full ownership of PEDL 133, a licence that covers an area surrounding its major petrochemicals facility at Grangemouth on the Forth.
The group has also acquired interests in IGas’s Bowland Licence portfolio in the north west of England and has the right to take up a 20% stake in two of its shale licences in the East Midlands.
Completion of the deal will immediately place INEOS as the UK’s third-largest shale gas developer.
Gary Haywood, chief executive officer of INEOS Upstream, said the firm held the ambition to be the UK’s single biggest player in the field and had the resources to make that dream a reality.
“This is a great opportunity to acquire some first-class assets that have the potential to yield significant quantities of gas in the future,” Mr Haywood added.
“INEOS believes that an indigenous shale gas industry will transform UK manufacturing, and that we can extract the gas safely and responsibly.
“We are pleased to have agreed this deal with IGas. INEOS’s scale, asset position across the UK, US shale gas expertise, and our expertise in managing oil and gas facilities will be a great match with IGas’s existing onshore asset base, and significant exploration and production capability.”
Shares in IGas rose almost a fifth in morning trading, closing up 15.6%.
CEO Andrew Austin was “delighted” to have completed the farm-out.
“Alongside the commitment from our existing partners, INEOS’s commitment of up-front cash and considerable capital investment will help fund us through the next steps of our shale appraisal and production programme.
“This transaction, together with our existing partnerships with Total and GDF, reinforces the potential and materiality of our portfolio to world-class counterparties and strongly positions us as we seek to work together to unlock the potential of our untapped natural gas resources in Britain.”
Friends of the Earth Scotland’s Mary Church said the deal was “hardly a surprise”, and suggested the “industry’s game of musical chairs with fracking licences” would have little effect as Scotland’s unconventional gas industry was currently subject to a government moratorium.