Shell sells North Sea fields for $3.8bn

ROYAL Dutch Shell agreed to sell a package of UK North Sea oil and gas assets for as much as $3.8 billion (R51.6bn) to Chrysaor Holdings, in a significant step in the energy major’s divestment programme.

The deal includes an initial consideration of $3 billion (R40.7bn) and a payment of up to $600 million (R8.1bn) between 2018 and 2021 subject to commodity prices, with potential further payments of up to $180 million (R2.4bn) for future discoveries.

Shell retains a fixed liability of $1 billion (R13.5bn) for any decommissioning costs associated with the assets, the company said yesterday.

The package of assets consists of Shell’s interests in Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block, the Greater Armada cluster, Everest, Lomond and Erskine, plus a 10 percent stake in Schiehallion, Shell said.

The fields represent total production of about 115 000 barrels of oil equivalent in 2016, compared with the company’s total North Sea output of 211 000.

Shell is planning to sell about $30 billion (R407.4bn) in assets through 2018 to help offset the $54 billion (R733.34bn) acquisition of BG Group, which increased debt and lowered its credit rating. Chief executive officer Ben van Beurden has vowed to boost savings following a two-year slump in crude oil prices.

The deal with Chrysoar is subject to partner and regulatory approvals, with completion expected in the second half of 2017. Shell sold its 50 percent stake in a petrochemical joint venture in Saudi Arabia to Saudi Basic Industries for $820 million (R11.1bn) earlier this week.

It’s also considering a sale of its stake in a Malaysian liquefied natural gas export plant, which could fetch more than $1 billion (R13.5bn), people familiar with the matter said in October. – Bloomberg