Shell could sell some North Sea assets

 
Jessica Morris
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Oil prices have tumbled from above $100 in the middle of 2014 (Source: Getty)

Royal Dutch Shell could sell some of its older, lower grade North Sea assets as part of a two-year programme to help pay for its £35bn purchase of BG.

It confirms previous reports that the oil major would use its assets there to help hit a $30bn sales target between 2016 and 2018, a goal which will go towards financing the BG deal and maintaining its dividend.

Shell's chief executive, Ben van Beurden, told the LNG18 conference in Perth, Australia: "The North Sea for us will be an area where we will have to take a look, as we have to do with our entire conventional upstream, now that we have a much enlarged portfolio."

Read more: Is the BG-Shell deal offering value to investors?

He also said that the BG assets Shell acquired in the North Sea are newer, have more running room and are of a higher quality, so the company would look to sell some of its other properties there, Reuters reported.

Stephane Foucaud, an analyst at First Energy Capital, told City A.M. that he thinks all of Shell's UK assets could be put up for sale.

"Buyers could include private equities, some national companies such as MOL and perhaps for more specific assets smaller companies such as the likes of Cairn and Faroe‎," he added.

Read more: Ex-Shell boss says time "ripe" for oil majors to eye alternative energy

The Sunday Times previously reported that a potential Shell North Sea asset buyer could be $5bn oil and gas fund Neptune Oil. Danish oil firm Maersk’s chief executive has also told Energy Voice that it could be interested in the assets.

About 2,500 of Shell's 7,500 employees work in the North Sea, where it operates more than 33 offshore installations.

Credit ratings agency Moody's recently downgraded Shell due to the BG acquisition, saying that the merger had left Shell with increased leverage. It also warned lower for longer oil prices could hamper its asset sale plan.

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