Scottish and Southern Energy (SSE) has agreed to buy the natural gas assets and infrastructure assets of the US energy firm Hess in three regions of the North Sea for $423 million (Ôé¼313 million).
The gas and liquid resources which SSE is acquiring total around 383 billion cubic feet, or 64 million barrels of oil equivalent. The assets are in the Everest and Lomond, Easington Catchment and Bacton areas.
While the upstream assets represent the majority of the transaction, the purchase also includes HessÔÇÖs 17.7 per cent stake in the BP-operated Central Area Transmission System pipeline, which delivers more than 10 per cent of the UKÔÇÖs gas demand through a 400 kilometre link from the North Sea to a processing terminal at Teesside, north-east England.
Perth, Scotland-based SSE said further resources of gas may also be identified following further exploration. The main operators are BG Group, BP and Perenco.
The assets will be used to supply customers and fire power stations. Increased access to gas resources will also reduce the SSEÔÇÖs exposure to price fluctuations on the wholesale market.
SSE needs about 1.3 billion cubic feet of gas per day to supply its customers and fuel power stationsÔÇöthe gas from HessÔÇÖs fields will initially provide about eight per cent of that demand, though it will decline over the next 10 years.
Commenting on the deal, Ian Marchant, chief executive of SSE, said: ÔÇ£This timely acquisition will enable SSE to enter the upstream gas sector in a measured way by buying proven and geographically diverse production assets.┬á
ÔÇ£These assets will provide a new source of primary fuel and a hedge for our gas generation and supply activities. The acquisition will also give us involvement throughout the gas chainÔÇöproduction, transmission, storage, distribution and supply.ÔÇØ
SSEÔÇÖs main competitor for UK power production is Electricit├® de France, or EDF.
Yesterday, SSE announced that its renewable energy development division has secured a ┬ú400 million (Ôé¼450 million) loan facility from the European Investment Bank to help finance the development of renewable energy schemes in the UK and Ireland.
The company is currently the UKÔÇÖs largest generator from renewable sources.
New York City-based Hess has operations in a number of countries worldwide, including the US, the UK, Norway, Denmark, Russia, Algeria, Libya, Australia and Brazil.
Its website says that it is actively seeking to increase its reserves ÔÇ£outside the mature regions of the United States and North SeaÔÇØ.
SSE is the UKÔÇÖs second-largest energy supplier and employs almost 20,000.
