PRIVATE equity giants have signalled they will invest billions of dollars in the North Sea in the belief there is good money to be made in the area following the oil price plunge.
Carlyle Group and CVC Capital Partners have recruited Sam Laidlaw a former head of the giant Centrica utility to lead a venture with an initial $5bn (£3.3bn) war chest for acquisitions in areas including the North Sea.
The new venture, called Neptune, said it will look for large-scale investment opportunities.
Mr Laidlaw said of the backers: "They share my enthusiasm to invest in building a new oil and gas company and to create significant value for our stakeholders at this pivotal time for the industry, in particular across the North Sea, North Africa and South East Asia."
The energy sector veteran knows the North Sea well after masterminding a big expansion drive in the area by Centrica, which owns Scottish Gas. Mr Laidlaw was chief executive of Centrica when it bought Aberdeen-based Venture Production for £1.3bn in 2009.
He said the launch of Neptune had been timed to capitalise on the opportunities that will be created following the fall in the crude price from $115 per barrel in June to around $65 currently, which Neptune does not expect to reverse soon.
"This isn't a bet on the oil price, because it could be with us for a while," Mr Laidlaw told Reuters.
Neptune expects to be able to do deals at bargain prices at a time when there are many North Sea assets up for sale and a limited number of buyers.
Mr Laidlaw noted: "The timing is good, a lot of the super majors are going through portfolio restructuring and national oil companies might be pulling back because of the lower oil price."
Total recently put a 20 per cent stake in the giant Laggan Tormore development West of Shetland up for sale. Shell is marketing two North Sea assets and has signalled it may offload others.
Neptune declined to give details of possible targets. It will consider buying companies and individual assets.
Mr Laidlaw believes there is good scope to increase returns from the fields Neptune acquires.
"We're expecting to deliver value through improving efficiencies, adding reserves, improving operating uptime and bringing in new technologies," he said.
The comments will likely be welcomed by ministers amid fears that investment in the North Sea will dry up.
Neptune could supplement the initial £3.3bn funding with debt and cash from other investors.
Separately Alpha Petroleum, which also has private equity backing, said it has been making good progress with plans to develop the Cheviot oil field East of Shetland.
London-based Alpha said it still expects to produce first oil from Cheviot in 2020.
The company has appointed the Xodus consultancy to complete an engineering study with a view to submitting a development plan for the field to the Oil and Gas Authority in September.
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