Taqa, the Abu Dhabi National Energy company, has confirmed it is to buy a 53.2 per cent stake in the Atrush energy exploration block in the Iraqi region of Kurdistan following weeks of speculation.
It is understood Taqa targeted the Atrush deal in August after the Russian oil giant Gazprom Neft was brought into the consortium appointed by the Kurdistan government to operate the region's Garmian Block, with Canada's WesternZagros.
Taqa had held an 18 per cent stake in WesternZagros with a view to acquiring the Calgary-based exploration company, but the Gazprom deal led to Taqa offloading the stake last week for US$38.5 million (Dh141.4m), under its strategic policy not to be a minority shareholder.
During the week, Taqa also bought BP's stakes in the North Sea for $1.1 billion, clearing the three deals prior to declaring a "quiet time" in advance of preparations for a potential benchmark-size bond sale.
Last week, the company hired five banks, BNP Paribas, Citigroup, HSBC, National Bank of Abu Dhabi and Standard Chartered, to arrange potential investor meetings scheduled for this week.
The Atrush block is located north of the Shaikan discovery announced by Gulf Keystone Petroleum in early 2010 and the recent Bijeel oil discovery to the east, operated by Kalegran.
Taqa will acquire its stake from the privately owned exploration company Aspect, which holds 66.5 per cent of General Exploration Partners, its joint venture with ShaMaran Petroleum.
General Exploration operates the Atrush block with an 80 per cent interest. The American energy giant Marathon Oil owns the remaining 20 per cent of the block.
"Atrush is a highly prospective block in a new growth area with significant upside potential," said the Taqa chief executive, Carl Sheldon. "This entry into a pure exploration play demonstrates how Taqa is leveraging its experience as an operator of complex oil and gas assets."
It is understood Taqa is looking for a firmer foothold in the Middle East and North Africa region (Mena). Its established oil and gas business is currently focused on North America, the United Kingdom and the Netherlands.
The purchase also adds to Taqa's other assets in Kurdistan. In April, the company said it was buying a 50 per cent interest in the 1000 megawatt Sulaymaniyah gas-fired power plant.
"The addition of Atrush to Taqa's oil and gas portfolio is perfectly in line with our growth strategy," said David Cook, the executive officer and head of oil and gas at Taqa. "This opportunity builds on our capabilities, and underscores our ability to evolve our operating position in the Mena region."
The acquisition will be funded from corporate resources and is expected to close this month. No price tag has been put on the deal because of privately owned Aspect's insistence on confidentiality.
The BP deal comes as a controversial tax rise for oil companies operating in the UK is being offset by new tax breaks, and indicates that a sustained effort by the British government to encourage Arabian Gulf investments in the country is paying off.
"This investment shows our commitment to the future of the North Sea. It is underpinned by the UK government's commitment to long-term fiscal stability," said Hamad Al Hurr Al Suwaidi, the chairman of Taqa and a member of Abu Dhabi's executive council.
The purchase of BP's assets increases Taqa's worldwide crude production by 21,000 barrels per day (bpd) to more than 60,000 bpd.
Under the deal, Taqa will acquire majority stakes in the Harding and Devenick fields, and a minority interest in the Maclure field, all of which lie in the central North Sea. The purchase also includes non-operating interests in the Brae complex and Braemar field and a stake in the pipeline infrastructure. The acquisition has been approved by the UK government and will be completed by the end of the second quarter next year.
Taqa already holds substantial assets in the North Sea, where it operates under its Taqa Bratani subsidiary. It has been smarting under a tax rise imposed on the UK oil and gas sector from last year, but the new tax regime will make it easier to offset decommissioning costs on spent oilfields, an important measure for companies operating the mature assets in the North Sea. It will also apply tax breaks to the development of new and existing fields.
"It is something that compensates for the changes that were made in 2011, when the rate of corporate tax for oil companies in the UK was increased," added Mr Sheldon.