TOTAL S.A. (TOT) said it has agreed to dispose its entire 6.4% stake in Gassled and related entities to Silex Gas Norway AS. TOTAL will receive about 4.64 billion kroner (US$ 870 million) from the sale. Silex Gas Norway is a wholly-owned subsidiary of Allianz Capital Partners. The deal is subject to regulatory approvals.
TOTAL said the sale of Gassled is a part of its ongoing efforts to optimize its portfolio. The company’s decision to sell the Gassled assets stems from the fact that it no longer considers the ownership of Norwegian midstream gas transportation assets as a core business.
Presently, however, TOTAL remains fully committed to its long term presence in the exploration and production of oil and gas in Norway.
Despite the sale of Gassled, TOTAL said it will continue to be a major user of the Gassled system with long term bookings to transport its equity gas production to customers in European markets.
Formed in 2003, Gassled is a joint venture that transports natural gas from fields on the Norwegian Continental Shelf to Continental Europe and the UK. Gassled’s infrastructure assets comprise about 4,958 miles of natural gas pipelines and associated platforms, processing plants and terminals in Norway, Belgium, France, Germany and the UK.
Gassled derives its revenues from tariff payments from Shippers using the system, these tariffs are regulated by the Norwegian Ministry of Petroleum and Energy.
Gassled’s largest shareholder is Norwegian state-run oil company Petero, which holds 45.8% interest. Other stake holders include Royal Dutch Shell PLC (RDS.A) with 5% interest, ConocoPhillips (COP) with 1.67% stake, Italy’s Eni SpA (E) with 1.27%, Norsea Gas AS with 2.26% interest and TOTAL with 6.43% stake.
Last year, ExxonMobil Corp. (XOM) offloaded its 8% stake in Gassled for about six billion kroner (approximately US$1.0 billion). Earlier this month, TOTAL’s closest peer Statoil ASA (STO) also announced plans to offload the majority of its stake in the Gassled joint venture for about 17.35 billion kroner (US$3.25 billion) in an effort to streamline its portfolio.
Under the agreement, Statoil agreed to sell 24.1% of its share in Gassled to a holding company, Solveig Gas Norway AS, which is held 45% by Canada Pension Plan Investment Board, 30% by Allianz Capital Partners, a subsidiary of Allianz SE and 25% by Infinity Investments SA, a unit of the Abu Dhabi Investment Authority sovereign-wealth fund.
Statoil said it will, however, retain a 5% stake in the pipeline venture. The deal is subject to approvals from the Norwegian Ministry of Petroleum and Energy as well as the Ministry of Finance.
TOTAL of France has been a major contributor to the development of a large number of fields in the Norwegian North Sea since the late 60s. It holds interests in 80 licenses on the Norwegian Continental Shelf, 17 of which it operates. Norway is the largest contributor to the company’s equity production, with an average of 310,000 barrels of oil equivalent per day in 2010.
TOTAL S.A. currently retains a Zacks #3 Rank (short-term Strong Hold rating). We maintain a long-term Neutral rating on the stock.
