Norwegian player carves away FPSO segment from renewables business

Oslo Stock Exchange-listed Magnora has put the wheels into motion to separate the floating production, storage, and offloading (FPSO) segment from its renewables business, splitting them apart due to the considerable growth in profits from the renewable section.

Magnora explains its rationale for separating the FPSO segment from its renewable business by saying that the reason for keeping legacy revenues linked to the FPSO business in the same entity as the renewables business is no longer present.

As a result of the shifting gears in the renewables business, the board of Magnora approved a plan on January 18, to establish a  separate entity for the firm’s legacy business, which refers to the contracts linked to the firm’s divested FPSO segment of the business.

While the Norwegian player sold its formerly core business in 2018, including patents and related technology rights associated with the FPSO technology business, the firm retained the right to use the technology under two existing agreements for two FPSOs: Western Isles and Penguins.

The first of these two FPSOs is owned by Dana Petroleum (E&P) Limited (76.9188%), as the operator, and NEO (23.0812%). The FPSO Western Isles has been in operation since early 2017 and is scheduled to come off-station as part of the planned cessation of production of the Western Isles fields around the second half of 2024. 

In November 2023, Jersey and NEO Energy executed agreements to acquire the FPSO in a bid to redeploy it as the processing facility for the planned redevelopment of the Buchan field, seeing it as the preferred solution for the redevelopment of the Greater Buchan Area (GBA) project.

On the other hand, the FPSO Penguins, which is destined to work at Shell’s redevelopment project on the Penguins field in the North Sea, is a 118-meter-tall vessel, equivalent to a 42-story residential building.

With the ability to withstand harsh sea conditions and a weight of 32,000 tons, the FPSO can process 12.75 million barrels of crude oil and 1.24 billion m3 of natural gas per year. The vessel has a maximum crude storage capacity of 400,000 barrels.

This is the first new operated vessel for Shell in the northern North Sea in 30 years. At peak production, the project is expected to yield the equivalent of 45,000 barrels of oil per day, and the oil major has suggested that it could open up further areas for exploration.

Since the separation combines a demerger followed by a merger to transfer Magnora’s licensing business to a wholly-owned subsidiary, this requires an extraordinary general meeting of shareholders, which is set to be held on February 19, 2024.

Following the restructuring, the Norwegian firm intends to spin off the legacy business to its shareholders as a newly listed company on the Oslo Stock Exchange. The demerger plan and the merger plan have been submitted for registration with the Norwegian Register of Business Enterprises.