Talisman Sinopec is splitting its North Sea business in two as it undertakes a “major transformation” of its operations in the face of spiraling costs and aging platforms and infrastructure.
The firm, which is a joint venture between Calgary-based Talisman Energy and Chinese state-owned Sinopec, said the company would be divided into an operations division holding some North Sea assets and a “late life asset division”.
The company would not comment on the effects of the restructuring on its estimated 3,000 strong work force, although it has emerged that Roy Buchan, the firm’s technical and production director, has resigned from his role to pursue other opportunities.
The firm has interests in 46 North Sea fields and operates 11 offshore installations and an oil terminal at Flotta, Orkney.
Several of its assets have been described as being at the “challenging end of the scale” in terms of decommissioning liabilities.
Calgary-based Talisman has been seeking to sell or “dilute” its North Sea position, and it is thought the restructuring could pave the way to attract potential buyers.
Jeremy Cresswell, editor of the Press & Journal’s sister paper, Energy, said the split of Norwegian assets from aging North Sea installations could be in line with deals done by Marathon whose assets have a similar profile to Talisman’s.
He said: “This would neatly package up the NCS part of Talisman and make it quite attractive compared to the UK business, which is struggling.
“It would roughly mirror Marathon Oil, which managed to sell its Norway business to Det norske oljeselskap for £1.3billion in June this year, but is struggling to shift its UK sector Brae assets.”
A spokeswoman for Talisman Sinpoec said: “Our industry is operating in a mature environment, against a backdrop of, seemingly, ever increasing operating costs, asset integrity and maintenance issues as well as a declining oil price.
“Talisman Sinopec Energy UK has launched a major transformation of our business which includes the creation of two distinct business divisions, the appointment of a new leadership team and a business improvement programme. Both divisions will relentlessly focus on safety, environment and life-of-field asset stewardship.
“Our Operations division will focus on being an excellent operator of UKCS assets. We will maximise production and extend field life. This will involve investment in incremental opportunities, such as infill wells and projects, as well as a relentless drive to improve production efficiency and manage cost.
“Our Late Life Asset division will be very different and will put us at the forefront of late-life asset management. We will find innovative and creative ways to become a safe yet ultra-low cost operator. There will be a very strong focus on cost delivery, as well as selected, but limited, investment to maximise economic resource recovery.
“We are committed to delivering on our promises to all of our stakeholders, including our shareholders, employees and business partners in addition to regulatory authorities.
“The next chapter for TSEUK demands creativity and innovation as we develop excellence in late-life asset management and decommissioning. We are shaping the future direction of our business – and industry – to protect our long-term sustainability within the sector.”
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