Abu Dhabi-owned energy company TAQA Bratani Ltd plans to boost North Sea oil and gas production by buying up mature oilfields and greatly increasing their efficiency, the head of the company's UK arm said on Thursday.
TAQA, the UK arm of Abu Dhabi National Energy Company PJSC TAQA.AD, took control last week of operations of the North Sea Brent crude system from Royal Dutch Shell.
The Brent system, responsible for transporting around 100,000 barrels per day (bpd) of oil, is a key production stream and an important part of the pricing benchmark used to value billions of dollars of oil around the world.
We want to rule the North Sea, of course, said Managing Director Leo Koot, outlining an ambitious, long-term strategy.
He explained, more seriously, that he hoped the company would increase UK North Sea output steadily from its current level of about 45,000 barrels of oil equivalent per day (boepd), which is split into roughly 80 percent oil and 20 percent gas.
A realistic target for us, we would hope by 2012, would be to have a build up in production to between 50,000 and 60,000 boepd, he told Reuters in an interview. That is where we hope to plateau for a few years barring any additional acquisitions.
TAQA's Dutch arm this week bought a 15 percent stake in North Sea assets from a group including U.S. major Chevron Corp (CVX.N). It has already amassed more than $2 billion in North Sea assets since its foundation in 2005 and plans further growth.
Koot said TAQA, more than 70 percent owned and controlled by the government of Abu Dhabi, rated Aa2 by Moody's and backed by sovereign wealth, aimed to double to a $40 billion-$60 billion company by between 2012 and 2016 from almost $25 billion now.
TAQA aims to hold 40 percent of its assets upstream in activities such as oil and gas production, 20 percent mid-stream in pipelines and gas storage and 40 percent downstream in areas such as electricity and water production.
TAQA now has extensive North Sea assets with a portfolio that includes pipelines, platforms and subsea satellites.
Because we are such a young company, the only realistic way to grow is through acquisitions. But that strategy is changing now because we have a healthy asset base. From now on it will be strategic acquisitions, he said.
There are a few northern North Sea exploration licenses around. We are looking to take those on to see if there is any undiscovered oil, plus mature assets, which may be abandoned, to see if we can get production from redeveloping infrastructure.
Koot said small upstream companies had shown they could get more out of mature oilfields than the large major oil companies.
Nearly all of them have managed to double production from those facilities, he said. The majors have had these assets in their possession for a long time, maybe 25 years, and for them these assets are old toys, he said. Complemented with a strong financial backing, we are able to enhance production.
Koot said he believed 15-25 billion barrels of oil equivalent was still available in UK North Sea reserves.
We see good solid business potential in the North Sea.
He declined to discuss returns on investment but said oil prices were now sufficient to make North Sea oil production profitable and he had continued to invest despite the downturn.
The best way to describe a sovereign wealth fund is that it is patient money ... we are there for the long haul, he said.
With our commitment and financial backing we have been able to invest counter cycle. So by the time oil prices recover we are going to be sitting there with a healthy portfolio.
(Reporting by Christopher Johnson; editing by Anthony Barker)