Advertisement

Total splashing out in North Sea with Maersk buy

Total will become the second largest operator in the North Sea: Andy Buchanan/Getty Images
Total will become the second largest operator in the North Sea: Andy Buchanan/Getty Images

French oil giant Total today signalled its confidence in the future of the North Sea by splashing out almost $5 billion (£3.9 billion) on Danish shipping giant Maersk’s oil arm.

Total will buy Maersk Oil for $4.95 billion in shares and take on $2.5 billion in debt.

The deal, which requires approval from Denmark’s energy minister, is expected to close in the first few months of next year.

Maersk operates one of the largest developments in the UK North Sea, the £3 billion Culzean gas field, which is expected to start producing in 2019.

The North Sea oil industry has been struggling to cope since crude prices plunged in 2014 given the high operating costs.

Maersk Oil, whose UK business employs nearly 700 people, is run by Gretchen Watkins, an American who previously ran Marathon Oil’s operations.

She worked at BP for a decade after the UK major bought Amoco, formerly Standard Oil. Watkins is also on the board of WS Atkins.

Total predicted cost savings of $400 million, mainly in the North Sea, and made no commitments on jobs, but said it would “maintain Maerk Oil’s strong position in the North Sea”.

Patrick Pouyanne, chairman and chief executive, said Total would be the “second operator in the North Sea with strong production profiles in UK, Norway and Denmark”.

BP last month denied rumours it wants to sell its North Sea assets.