Ineos buys North Sea assets from LetterOne

Swiss chemicals giant Ineos has bought its first British North Sea gas fields from Russian billionaire Mikhail Fridman’s investment fund LetterOne, outlining plans to further expand its energy resources to support its petrochemical business.

The deal ends a stand-off between Fridman and the British government that gave him six months to dispose of the UK assets Letter-One had acquired from German utility RWE, or see their licences revoked as the West tightened sanctions against Moscow over its role in the Ukraine.

The sale was estimated at around $750m, according to banking sources, falling short of LetterOne’s initial target of $1.2bn.

Ineos said the gas assets provide up to 8% of Britain’s requirements and that it would seek more.

“Ineos has been very open about its intention to make strategic investments in the North Sea and this acquisition is our first step in fulfilling this goal,” said Ineos chairman Jim Ratcliffe.

For LetterOne, the sale will allow it to focus on its plans to acquire further assets in Europe and North Africa, a spokesman said.

LetterOne emerged as the frontrunner for the acquisition of German utility E.ON’s Norwegian North Sea assets, banking sources told Reuters last week.

Ineos operates Scotland’s largest manufacturing complex at the Grangemouth refinery and petrochemical plant, the destination of a pipeline from North Sea fields.

Last year, Ineos announced plans to invest $1bn in British shale gas exploration, using fracking technology, with an ambition to become the country’s biggest shale gas player.

Ineos also said on Sunday that it has set up a new oil and gas subsidiary, Ineos Upstream, to conduct a strategic review of the potential opportunities in the North Sea.


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