Engie buys DNO's Norwegian gas production for four years

The Norwegian company DNO announced on Wednesday that it had sold all of its gas production from the Norwegian continental shelf over a period of four years to French utility Engie at an undisclosed price. The deal was facilitated by an American bank loan, as U.S. banks are increasing funding for the fossil fuel sector. It also said that it is in talks over a similar agreement and financing facility related to its North Sea oil production. The agreement will take effect on October 1, and it covers DNO’s increased gas production following its March acquisition of assets from Sval Energi.

Sval's purchase quadrupled DNO’s North Sea production, which now stands at about 80,000 barrels equivalent of oil per day. About half of this is natural gas.

A press officer for Engie said that both the price and volume of the contract are confidential.

DNO has not disclosed the exact volume of its four-year contract to Engie. However, DNO and Sval Energi produced 1,82 bcm from the Norwegian continental Shelf last year.

DNO reported that the Engie contract enabled it to secure funding from an unnamed U.S. Bank for up $500 million. This was based on 270 days' worth of gas sales. The money will be used for Sval Energi to pay off its debts, and also for corporate purposes.

In a press release, DNO Executive Chair Bijan Mossavar Rahmani stated that "we have received strong interest from buyers to prepurchase the enlarged North Sea Production". (Reporting from Nerijus Adomiaitis and America Hernandez, Paris; Editing done by Barbara Lewis and Mark Porter.)

(source: Reuters)