Spain’s Repsol and China’s Sinopec have ended an eight-year North Sea dispute with a £1.7 billion deal.
It will see Repsol become full owner of Aberdeen-based joint venture Repsol Sinopec Resources UK (RSRUK).
Sinopec launched proceedings back in 2015 over the price paid by its subsidiary – Addax – for 49% of the business (then Canadian-led Talisman Energy’s UK North Sea operation), arguing the £1.2bn price was too high.
The Chinese firm wanted further compensation to cover “any additional investment” and “loss of opportunity”.
A deal has now been struck where Repsol will acquire Sinopec’s 49% stake in RSRUK, meaning the Spanish firm becomes 100% owner.
Completion of the share transfer is expected by the end of this year.
RSRUK has 884 employees, according to the most recent accounts filed at Companies House.
‘No significant impact on earnings’
In a stock exchange statement, Repsol said it would continue to work on a broad strategic collaboration with Sinopec, including through their joint venture in Brazil.
Repsol said it has made provision in its accounts for the settlement, so there will be “no significant impact on earnings” – but it will still amount to an £887 million hit.
A spokeswoman for RSRUK said there “will be no immediate changes to our business or operations, and we remain focused on the delivery of our corporate strategy and business plan”.
She added: “As always, we prioritise the safety of our operations and the health, safety and wellbeing of our people.”
International law firm Herbert Smith Freehills (HSF) advised Sinopec throughout the dispute.
HSF partner Tomas Furlong said: “We’ve advised Sinopec on this matter for over nine years in total, a period that spans some of the most disruptive periods on record for the oil and gas industry, and global business in general.”
RSRUK has interests in 48 fields, of which it operates 38 in the UK North Sea, with 11 offshore installations and two onshore terminals.
Conversation