Delek Group is in talks with EnQuest to acquire 20% stake in the £4bn ($5.2bn) Kraken field development project in the UK North Sea in a bid to further expand its upstream oil and gas assets beyond Israel.
As part of the negotiations, Delek Group has signed a non-binding memorandum of understanding with EnQuest.
The firms are now working towards signing a joint operating agreement and other agreements related to the Kraken project, which is claimed to be one of the biggest subsea heavy-oil field projects in the UK North Sea.
Under the terms of the deal, subject to signing, Delek will acquire 20% stake in the exploration and production licenses of the Kraken field located in Blocks 9/2b and 9/2c that are in License P1575 in the sea.
Spread over 42km at a depth of 1,300m, the Kraken field is estimated to hold about 147 million barrels of heavy crude oil in the 2P probable reserves category, according to EnQuest report.
Expected to commence production in the first half of 2017, the field will produce oil from 25 wells which include 14 for production and 11 for injection.
The proposed sale is part of EnQuest’s plans to divest potential asset to reduce debt amid a slump in oil prices.
EnQuest holds 70.5% stake in the Kraken project while the remaining 29.5% stake is held by Cairn Energy.
Delek agreed to offer $20m loan to EnQuest for a period of five years.
Earlier, EnQuest acquired 15% stake in blocks 9/2b and 9/2c including the Kraken oil discovery from partner First Oil.
Image: The Kraken field is estimated to hold about 147 million barrels of heavy crude oil in the 2P probable reserves category. Photo: courtesy of courtesy of Cairn Energy PLC.