French oil giant Total has increased its stake in two fields West of Shetland as it presses ahead with its “landmark” £3billion Laggan-Tormore development.
The company yesterday announced it would acquire a 10% stake in Glenlivet for £10million as well as upping its stake in the nearby Edradour from from 75% to 80% through a deal with Dong Energy.
The Glenlivet field is set to be tied back to Total’s Laggan-Tormore alongside the nearby Edradour field in a project estimated to cost £950million and represents 65Mboe of reserves, Total said.
Total recently relaunched the £340million Edradour project, 34 miles north-west of Shetland after negotiations with contractors had resulted in favourable new terms, it said.
The development had been put on hold last year due to “significant cost increases following the tendering process”, Total had said.
The move came as the Paris-based firm announced plans to sell a further £6billion of assets in the next two years in an effort to cut costs £1.2billion each year through 2017.
Patrice de Vivies, Total’s Senior Vice President Exploration & Production, Northern Europe said, “The acquisition of 80% of the Glenlivet license ensures the full alignment of the ownership in Laggan-Tormore, Edradour and Glenlivet between Total and Dong Energy.
“This will allow significant synergies both from a development, cost and operational point of view.
“These agreements also emphasise Total’s dedication to ensuring that discoveries made West of Shetland can be developed in an efficient manner by using existing infrastructure.
“By increasing and optimising the scope of work for the contractors and working closely with them, we have also ensured significant cost reduction and thereby allowed otherwise stranded resources to be economically developed.”
Graham Stewart, chief executive of Faroe Petroleum, said the sale was “in line” with its strategy and would release funds for investment in its existing portfolio.
The Aim-listed explorer has been focused on a number of recent discoveries in the Norwegian North Sea, including the Pil oil and gas find, as well as the development of the Lowlands and Perth fields about 140 miles north-east of Aberdeen, which is due for first oil from 2018.
Mr Stewart said:“Total’s West of Shetland gas development project to export gas from Laggan, Tormore, Edradour and Glenlivet is a highly capital intensive investment in infrastructure, and one of the most significant UK upstream investments in recent years.
“Faroe’s timely transaction will release significant capital for investment in Faroe’s high impact exploration and appraisal portfolio.”
The sale of the stake is backdated to be effective January 1, 2014, while a proportion of the sale price is deferred until the submission of the field development plan and certain production targets being achieved, Faroe said.
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