Receipt of OFAC License and Assurance for Rhum
Tuesday 9 October 2018
Serica Energy plc announced that its wholly owned subsidiary, Serica Energy (UK) Limited, and BP have received a conditional License and assurance from the U.S. Office of Foreign Assets Control (“OFAC”) relating to the UK North Sea Rhum field. Subject to the fulfilment of the conditions, the License will allow certain U.S. and U.S.-owned or controlled entities to provide goods, services and support involving Rhum. OFAC has also provided an assurance that non-U.S. entities providing goods, services and support involving Rhum will not be exposed to U.S. secondary sanctions. These OFAC actions will enable production from the Rhum field to continue unaffected. Following previous practice, the OFAC License is valid until 31 October 2019, but may be renewed (together with the assurance) on application by Serica UK assuming the conditions continue to be met.
The License and assurance are conditional upon arrangements being put in place by 4 November 2018 relating to the interest in the Rhum field held by Iranian Oil Company (U.K.) Limited (“IOC”). These arrangements are well advanced and will provide that all benefits accruing from and relating to IOC’s interest in the Rhum field will be held in escrow for such period as U.S. sanctions apply and ensure that neither IOC nor any direct or indirect parent company of IOC will derive any economic benefit from the Rhum field during that period. IOC will also exercise no decision-making powers in respect of Rhum during the same period.
Receipt of the License and assurance fulfils a major condition of the sale and purchase agreement announced in November 2017 under which Serica UK will acquire BP’s interests(1) in the Bruce, Keith and Rhum fields (“the BKR Transaction”). Serica UK and BP are now able to put in place the final arrangements to complete the BKR Transaction and for Serica UK and Total to complete the related transaction announced in August 2018 under which Serica UK will acquire Total’s non-operated interests(1) in the Bruce and Keith fields.
For operational reasons, the transition of operatorship must take place at the start or end of the month and the actual date must be fixed sufficiently in advance. Taking these factors into account, BP and Serica UK have agreed on 30 November as the revised completion date for the BKR Transaction. Although slightly later than the previously announced target of early November, this will enable the arrangements required by OFAC to be put in place prior to completion and ensure an orderly, safe and efficient transition.
(1) BP and Total are both retaining a 1% interest in the Bruce field.