Fortum to sell UK and Ireland power generation assets
Source: The Financial Times

Fortum, the Finnish energy group, is to sell its electricity generation assets in the UK and Ireland as part of a strategic concentration on the northern European market. The announcement on Monday 19th June follows completion of Fortum's purchase of the energy assets of Stora Enso of Sweden in the spring for SKr14.2bn (E1.7bn). It will continue its trading activity in the UK power market.

The company's producing assets in the UK comprise all of the 240MW capacity of a gas-fired power station at Brigg and a 22.5 per cent share of the 1,260 MW capacity of a gas-fired power station at Stallingborough, both in north east England. It also has a 75 per cent share in a combined heat and power plant under construction in Grangemouth in Scotland and 100 per cent of a 118MW peat-fired plant in Edenderry in Ireland.

Overall, the Fortum group has electricity supply capacity of 10,100MW. Kari Huopalahti, executive vice president for corporate development, declined to put a value on the assets to be sold. He said the move was not a criticism of the UK energy market. The UK and Nordic electricity markets opened to competition and "Having it two ways was just too much for us," given the subsequent growth of power trading in the rest of continental northern Europe, said Mr Huopalahti.

He said the sale of UK and Irish assets is a "first step" and reiterated that Fortum is to sell its Asian assets. Fortum also has generating assets in Hungary and Russia that do not appear to fit in with the new focus. The company has named BNP Paribas as its advisor in the sale of assets it described as "an attractive combination of power generation business and ... an excellent platform for growth for a buyer seeking to enter or expand in these markets".

Shell tempts oil target with offer
Source: (Virginia Marsh) The Financial Times

Royal Dutch/Shell, the Anglo-Dutch oil group, is offering Woodside Petroleum a share in two Iranian oil fields as part of its bid to increase its stake in the Australian company. Analysts in Australia valued the assets being offered by Shell - detailed at the end of last week - at about A$6bn (£2.3bn).

The move follows Shell's proposal, announced last month, to increase its stake in Woodside, Australia's largest oil and gas group, from 34.3 to 60 per cent, in return for a portfolio of assets, including its upstream Australian interests. Under the proposal, which Woodside said it hoped to put to its board at the end of the month, the Australian group would issue 429m new shares to Shell.

Based on the A$6bn valuation of the portfolio, this would equate to about A$14 per Woodside share, against Friday's closing price of A$12.87, up from A$11.69 before news of the proposal emerged last month. Shell had been expected to include Australian and New Zealand assets in the package but the inclusion of a 20 per cent interest in the redevelopment of Soroosh and Nowrooz, two Iranian oilfields was a surprise.

The two fields, which together have estimated reserves of over 1bn barrels, are being developed by Shell under a buy-back agreement with the National Iranian Oil Company. In New Zealand, Woodside - whose advisers include Credit Suisse First Boston - is being offered stakes ranging between 18.3 and 50 per cent in the Maui and Kapuni fields, in the Maari development and in the Pohokura discovery.

If it proceeds, the deal will almost double Woodside's market capitalisation, propelling it into the top twenty companies listed on the Australian Stock Exchange.

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