French energy giant Total is selling stakes in four gas fields to UK power supplier SSE in a deal worth £565 million.
SSE is buying 20% of shares in the Laggan, Tormore, Edradour and Glenlivet fields – collectively known as the Greater Laggan Area – located in the West of Shetland area.
The sale also includes 20% of Total’s interest in the Shetland Gas Plant. It is part of Total’s target of divesting $5 billion (£3.2bn) of assets this year.
The fields are not yet producing gas but are expected to start production this financial year and peak production – at around five million therms of gas per day – is forecast to be achieved next year.
SSE expects to invest around £250 million in further development by 2018.
The Big Six company said the agreement comes at a time when production volumes at its existing gas fields are expected to decline. In 2014/15, output from its gas assets was just under 400 million therms.
Alistair Phillips-Davies, Chief Executive of SSE, said: “The acquisition means we will be able to introduce further diversity across our investment programme. It comes following a period of relatively low wholesale gas prices and is therefore timely. It completes our portfolio of gas production assets for the foreseeable future.”
Total will continue as the operator of the fields and will own a 60% stake. The remaining 20% is owned by DONG Energy.
The deal is subject to regulatory approval.