Petrochemical giant Ineos has agreed to acquire Dong Energy's upstream oil and gas business for about $1.3bn.

The acquisition of Dong Oil & Gas Business includes a contingent payment of $150m associated with the Fredericia stabilisation plant and another contingent payment of up to $100m based on the development of the Rosebank field.

The transaction is expected to put Ineos among the leading operators in the North Sea with a portfolio of assets which produced 100,000 barrels of oil equivalent per day (boepd) last year.

The assets which are believed to have long life had produced around 570 million boe of commercial and potential oil and gas reserves in the UK, Danish and Norwegian continental shelves.

A majority of Dong’s production, about 70%, came from Norwegian fields in 2016. The Danish fields and the UK West of Shetland fields contributed 15% each to its total production.

Put together, Dong Energy has 50 licences in the three countries. Its 440 employees working in its oil and gas business will be transferred to INEOS post acquisition while the business will operate under the INEOS Upstream division.

Ineos chairman Jim Ratcliffe said Dong Energy's oil and gas business is a natural fit for the company and its acquisition is very important for its growth plans.

Ratcliffe added: “We have been successful in our petro-chemical businesses, focussing on operating our assets safely, efficiently and reliably and we intend to do the same with our oil & gas assets. We are keen on further growth and already see lots of opportunity within this impressive portfolio when it transfers to Ineos”.

The divestiture would transform Dong Energy into a pure play renewables company.

Dong Energy CEO Henrik Poulsen said: “Since the decision in 2016 to divest our upstream oil and gas business, we’ve actively worked to get the best transaction by selling the business as a whole, getting a good and fair price for it and ensuring the optimal conditions for the long-term development of the oil and gas business.

“With the agreement with INEOS we’ve obtained just that.”

Depending on clearances from regulators and other third parties, the acquisition is expected to close within the third quarter of this year.

Image: Ineos hopes to become a leading player in the North Sea with Dong’s oil and business acquisition. Photo: courtesy of INEOS.