Shell in $5bn Woodside sale amid flurry of deals

Oil major Shell has moved closer to its goal of disposing of 
$15 billion (£8.8bn) of assets by the end of next year after unveiling a $5bn deal to offload most of its stake in an Australian company that it tried to buy more than a decade ago.

Royal Dutch Shell CEO Ben van Beurden. Picture: Getty

The sale was announced amid a flurry of deals across the energy sector yesterday, with BP signing a $20bn contract to supply liquefied natural gas (LNG) to China National Offshore Oil Corporation (CNOOC) and BG selling its stake in a key North Sea gas pipeline.

Shell was left with a large holding in Woodside Petrol-eum, Australia’s second-largest oil company, after its 2001 takeover attempt was blocked by regulators. After selling a 19 per cent chunk in the business to institutional investors and Woodside itself, the group’s holding will fall below 5 per cent.

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Chief executive Ben van Beurden, pictured, said the disposal was part of the group’s attempts to improve its capital efficiency and focus its Australian operations on directly owned assets.

He added: “It doesn’t change our view of Australia as an important player on the global energy stage, or Shell’s central role in the country’s energy industry.”

Analysts at RBC Capital Markets said the $5bn deal “will move Shell significantly towards its declared target of $15bn from divestments by the end of 2015”. The group, which is attempting to win round investors after a major profit warning earlier this year, is also eyeing the sale of assets in the North Sea but has insisted that it remains committed to the region.

Meanwhile, BG said yesterday that it has agreed to sell its 62.78 per cent interest in the central area transmission system (Cats) pipeline for up to £562 million as it seeks to “actively manage its asset portfolio and deliver value to shareholders”.

The deal, with private equity firm Antin Infrastructure Partners, is expected to complete before the end of this year but will not affect BG’s right to capacity in Cats, which carries gas from the central North Sea. The 250-mile pipeline, operated by BP, pumps up to 1.7 billion cubic feet of gas a day to a processing terminal in Teesside.

BP chief executive Bob Dudley, speaking at a conference in Moscow, hailed the group’s supply contract with CNOOC as a “good bridge between the UK and China in terms of trade”.

He added: “It is a 20-year supply agreement on LNG. It is a fair price for them and a fair price for us.”

BP is expected to source much of the LNG from its US export plant at Freeport in Texas, where it owns 4.4 million tonnes per year of export capacity, having started negotiations with CNOOC earlier this year.

The group has also sealed a deal to sell an 18 per cent stake in North Sea blocks containing the Erskine field to Serica Energy, which is paying $11.1m in cash.