Despite low oil prices, the North Sea will see a rise in infrastructure deals this year.
That’s according to analysts Deloitte, who predict more oil and gas companies are looking to “rationalise” their portfolios and divest non-core assets in the UK Continental Shelf (UKCS), with private equity and infrastructure funds.
Its report added pipelines have provided a “solid and steady” return in the last five years.
The asset class was highlighted by investors as performing well compared with other infrastructures, including fuel storage, ports and renewables, according to the firm.
The internal rate of return on pipelines reached 14% in the last three years, it added.
The firm also stated pipelines will remain a “strong” focus for infrastructure investors in the future, along with gas and fuel storage.
Shaun Reynolds, Director Transaction Services at Deloitte said: “Historically, big oil and gas operators developed and owned what they needed, transporting their major discoveries through proprietary pipelines and refining it in their own processing plants.
“The ownership model has evolved, driven by the maturity of the basin and the low oil price. Established players are divesting to shore up their balance sheets and infrastructure is comparatively less complex to value and sell, with a ready market at the right price. Private equity firms and specialist energy infrastructure funds are likely buyers – specifically those with a solid grasp of the UKCS.”