Shell scraps B30bn Bongkot gas field deal with KUFPEC
Royal Dutch Shell Plc yesterday said it has cancelled a US$900 million (30 billion baht) deal to sell its Bongkot gas field stakes in Thailand to Kuwait Foreign Petroleum Exploration Company (KUFPEC).
BG Asia Pacific Holdings Pte, part of the Shell Group of Companies, and KUFPEC Thailand Holdings Pte, a subsidiary of KUFPEC, reached an agreement to cancel the deal to sell the gas field stakes of Shell Integrated Gas Thailand Pte Ltd (SIGT) and Thai Energy Co Ltd (TEC).
A Shell statement said SIGT and TEC together hold a 22.2% equity stake in the Bongkot gas field and adjoining acreage offshore of Thailand, consisting of blocks 15, 16 and 17 and block G12/48.
Shell’s partners in the Bongkot asset are the operator, PTT Exploration & Production (PTTEP), with a 44.4% equity stake, and Total, with a 33.3% stake.
SIGT and TEC will continue to support PTTEP in operating and developing Bongkot.
Shell Group said it remains committed to its downstream, gas and liquefied natural gas businesses in Thailand and is retaining its interests in blocks seven, eight and nine.
The sale was part of efforts by the Anglo-Dutch company to reduce its debt after buying a smaller rival, BG Group, for $70 billion.
“To date, the company has more than $25 billion in completed, announced or in progress divestments, on track to meet its target of $30 billion of divestments between 2016-18,” Shell said in a statement.
Apart from continuing to support operations and development at Bongkot, SIGT also intends to participate in the forthcoming licensing round for the extension of the Bongkot concession, known as the 21st round of petroleum bidding, the company said.
“Having almost met its $30 billion divestment target, there’s no l onger the same pressure on Shell to sell,” said Andrew Harwood, research director of Asia-Pacific upstream oil and gas at Wood Mackenzie.
“Thailand remains a small but profitable part of Shell’s portfolio in Southeast Asia. With the Bongkot concession set to expire in 2023, we’d expect Shell and the other Bongkot partners to bid in the upcoming auction for the next phase of the project.”
The Department of Mineral Fuels reported that the concession for Bongkot’s B15-17 will expire in 2022-23.
The concession for Bongkot is due to expire during the same year as that of the Erawan gas field, which is operated by Chevron Offshore Thailand.
Auctions for Bongkot and Erawan will be done after the terms of reference and production sharing agreements are completed.
The two blocks account for 40% or 2,000 standard cubic feet per day of Thailand’s total gas demand.