INEOS Buys Shale Interests from IGas, Becomes Third Company for Licences in UK

IGas signed a Farm Out and Purchase Agreement (FOPA) with INEOS on seven shale licences in England and Scotland for £30 million cash. INEOS will also fund a £138 million programme to appraise and develop the sites.

‘INEOS has today announced it is acquiring at least a 50% interest in seven of IGas’ shale gas licences in the North West along with the option to acquire a 20% interest in two further IGas shale gas licences in the East Midlands’ reads a note released by the chemical company on Tuesday. 

IGas also sold all its shares in the shale gas licence around Grangemouth in Scotland, giving INEOS 100% ownership.

‘This deal will move INEOS up to third place in terms of UK onshore oil and gas licences, giving it access to almost a quarter of a million acres of potential shale gas reserves.’

With the transaction, IGas will transfer 67 TCF of Gas Initially In Place (GIIP) to INEOS, which accounts for almost 50% of half of its current estimated GIIP.

“This is a further significant step for INEOS  in its plan to become the biggest player in the UK shale gas industry. We believe shale gas could revolutionise UK manufacturing and INEOS has the resources to make it happen, the skills to extract the gas safely and the vision to realise that communities must share in the rewards for it to be successful” Gary Haywood, CEO of INEOS Upstream, commented. 

IGas welcomed the deal, saying that the cash will enable to company to better develop its remaining onshore licence interests. 

“This transaction, together with our existing partnerships with Total and GDF, reinforces the potential and materiality of  our portfolio to world class counterparties and strongly positions us as we seek to work together to unlock the potential of our untapped natural gas resources in Britain” Andrew Austin, CEO of IGas, commented in a separate note.  

Last November, INEOS committed to a £640 million investment in shale gas exploration in the UK. 

Over the last hours, the oil and gas industry pressed on European governments, asking them to come out with a decision on fracking. On Monday, for example, Germany’s WEG oil and gas association asked the government to define a reliable strategy to foster domestic energy production and meet the country’s needs.