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CATS Management Limited expands its midstream infrastructure business

12th December 2017

CATS Management Limited (CML), an Antin Infrastructure Partners (Antin) portfolio company, has agreed to acquire a 65 per cent interest in the Esmond Transportation System (ETS), a key piece of established UK Southern North Sea midstream infrastructure.

Andy Hessell, Managing Director of CML commented: “We are delighted to have reached agreement on ETS. Growing our business in the Southern North Sea allows us to diversify our asset portfolio through exposure to an entirely new catchment area with different business dynamics, and to acquire infrastructure that has the characteristics we value.

“Investment in both established and new infrastructure is key to maximising economic recovery and realising the considerable potential of the UK Continental Shelf. We look forward to continuing to collaborate closely with our partners and customers to facilitate and encourage further investment which will support the long-term sustainability of the North Sea.”

Mark Crosbie, Managing Partner at Antin added; “Antin entered the North Sea over three years ago with our first CATS acquisition. Since we completed our second CATS acquisition, taking our interest to 99 per cent with operatorship, we have seen the Central North Sea deliver excellent business results. These two new opportunities in the Southern North Sea will complement and build on the success of CATS.”

ETS comprises a 165 kilometre pipeline that transports gas from fields in the Southern North Sea to the Bacton gas terminal on the North Sea coast in North Norfolk. The pipeline is currently operated by Perenco, as operator of the Trent and Tyne fields.

CML has entered into three sale and purchase agreements with Premier Oil plc (30 per cent), Centrica plc (25 per cent) and Perenco UK Limited (10 per cent). 

On completion of the acquisitions, CML will become the operator of ETS and will maintain the existing arrangement whereby Perenco operates the pipeline on its behalf in its capacity as operator of the Trent platform.

As with the Central Area Transmission System (CATS), which CML has successfully owned and operated since its acquisition from BG Group and BP, ETS is a mature infrastructure asset of strategic importance. CML’s approach to ETS will be similar, working with upstream operators to support the day-to-day operation of existing fields and encouraging them to invest in new developments to maximise economic recovery.

The ETS acquisitions are further progress towards CML expanding its midstream infrastructure business in the UK.  Earlier this year CML also signed heads of terms with Premier Oil and Dana Petroleum to enter into an infrastructure partnership to support the development of the Tolmount field, also in the Southern North Sea. Under the terms of the deal, CML and Dana will jointly construct and own the Humber Gathering System (HGS), consisting of a platform and export pipeline, in equal shares, with CML assuming operatorship. CML and Dana will also jointly undertake the onshore modifications at the Dimlington terminal in East Yorkshire, that are required to enable gas from HGS to be received and processed. 

The ETS and HGS investments fit with CML’s vision of being recognised as the leading midstream infrastructure business in the UK, and are aligned with its business model of investing in critical long-life midstream infrastructure, running it safely and efficiently and seeking to encourage and incentivise further upstream developments. 

They also support the industry’s drive to maximise economic recovery. ETS supports the delivery of gas from the Cygnus field to market, where there is scope for growth from the greater Cygnus area and beyond. Tolmount is one of the largest undeveloped gas fields in the North Sea and is part of the Greater Tolmount Area, where there is significant follow-on potential.

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