Shell sells Canada oil sands for $7.25 billion

london — Royal Dutch Shell Plc will sell almost all of its production assets in Canada’s oil sands in a $7.25 billion deal that cuts debt and reduces involvement in one of the most environmentally damaging forms of fossil-fuel extraction.

All of the company’s oil-sands interests apart from a 10 per cent stake in the Athabasca mining project will be sold to Canadian Natural Resources, Shell said on Thursday. The Hague-based company will continue as operator of the Scotford upgrader, which converts heavy oil to lighter liquids for easier transport, and the Quest carbon capture and storage project.

The Anglo-Dutch producer is almost two-thirds of the way through a $30 billion divestment program to reduce debt, which soared following its biggest-ever acquisition of BG Group Plc last year. The company this week ended an almost two-decade old US refining partnership with Saudi Arabian Oil Co. and earlier this year sold a collection of oil fields in the UK North Sea.

“This announcement is a significant step in re-shaping Shell’s portfolio,” chief executive officer Ben Van Beurden said in a statement. “The proceeds will accelerate free cash flow and reduce gearing and make a meaningful contribution to Shell’s $30 billion divestment programme.”

The deal also marks another step toward Van Beurden’s goal of preparing Shell for a world of lower oil prices and tighter restrictions on carbon emissions. Oil sands lured investors in the past decade as the surge in prices above $100 made the difficult extraction process economic. — Bloomberg