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Maersk oil deal ‘difficult’ for founding family

Maersk oil deal ‘difficult’ for founding family

COPENHAGEN: AP Moller-Maersk is to sell its oil and gas assets to French firm Total for $7.45 billion, a decision the matriarch of the founding family described as “difficult, but right”.

The agreement follows an announcement late last year by Maersk that it would split its operations into two entities, one focussed on energy (Maersk Oil), the other on container shipping, ports and logistics (Maersk Line).

At the time the company also said it was turning its focus more towards the freighting arm­—a hinted invitation to those interested in its oil assets, and one that Total has now taken up.

Maersk’s dual businesses had been hit by a perfect storm in recent years: Low oil prices and a slowdown in global freighting. Last year the $40-billion-a-year group reported its “unsatisfactory” $711 million profit, describing “headwinds in all of our markets”.

Ane Maersk Mc-Kinney Uggla, is chair of the AP Moller Foundation which owns the controlling stake in AP Moller-Maersk, and said the deal with Total was “difficult, but [the] right decision”.

Uggla is the granddaughter of Peter Maersk Moller, who founded Maersk in 1904.

“Maersk Oil has for almost half a century been at the forefront of the Danish oil development, been vital to AP Moller-Maersk and to this very day plays a decisive role in the Danish and international oil and gas industry,” Uggla said.

“This gives us pride. As owners, we seek the best foundation for the future growth of the Maersk Oil activities and the focused development of the Danish North Sea.”

Chief executive of AP Moller-Maersk, Soren Skou, said the value of the agreement with Total was “a testament to the quality and standing of Maersk Oil”.

“In addition, the agreement will strengthen the financial flexibility of AP Moller-Maersk and free up resources to focus our future growth on container shipping, ports and logistics,” Skou said.

The deal with Total, however, is not a clean break from oil for Maersk. Under the terms of the agreement, Maersk would acquire $4.95 billion in Total shares (a 3.76% stake), while the remainder of the $7.45 billion would be made up of Total assuming Maersk debt.

Maersk’s Denmark base will now become the regional hub for all Total’s operations in Denmark, Norway, and the Netherlands.

Patrick Pouyanné, chair and chief executive of Total, said his company would use Maersk’s expertise to accelerate Danish oil and gas production.

“With Maersk Oil’s technical and operating competencies and Total’s experience and strong financial position, we have an exceptional opportunity to boost the combined competitive position in several core upstream regions and deliver growth, value creation and career opportunities,” Pouyanné said.