BOC has agreed to acquire the industrial gases assets of Enron Teesside Operations Limited (ETOL) and the two have also agreed terms for a 15-year electricity supply arrangement.
The gases deal involves the acquisition of 28 miles (45 kilometres) of pipelines and compression facilities used for the delivery of gaseous oxygen and nitrogen directly to a number of large customers in the Teesside area. It will enable BOC to link directly with customers rather than go through ETOL for delivery.
The electricity arrangements cover supplies of up to 90 MW through new feeder cables to BOC’s major production site at Middlesbrough. The deal will provide a substantial increase in electricity custom for ETOL whilst providing long-term competitive pricing for BOC.
ETOL will also provide pipeline maintenance and cavity storage services to BOC.
The transaction itself is subject to regulatory approval. Implementation of the electricity part of the deal is subject to satisfaction of a number of other conditions agreed between the companies – including the supplier of electricity ceasing to be part of the Enron Group.
The consideration for the acquisition of the gases assets will be less than one per cent of The BOC Group net assets and will be payable in cash.
Editor’s note: BOC’s Teesside facility is one of the largest industrial gases complexes in Europe. BOC already operates over 40 miles (65 kilometres) of pipeline on both sides of the River Tees supplying both oxygen and nitrogen to several chemical, petrochemical and steel producers in the area. This position was enhanced in 1998 with a £40 million investment in a new air separation plant and more recently by the completion of the UK’s largest hydrogen production facility brought on stream for Huntsman at North Tees in February 2002 at a cost of £30 million. For many years BOC was ICI’s oxygen and nitrogen supplier, delivering large quantities of gaseous oxygen/nitrogen into a network of ICI-owned pipelines in the area. When ETOL acquired the Teesside Utilities and Services business of ICI in 1999, BOC became a supplier to ETOL, which in turn piped oxygen and nitrogen to the end-using customers.