Shell mulls selling oil fields in Iraq
29 Nov 2016
Royal Dutch Shell, Europe's largest oil and gas company, is mulling selling its oil fields in Iraq as part of its $30-billion asset disposal program, Reuters yesterday reported, citing industry sources.
Shell is seeking to sell its oil fields in Iraq but not its gas business, the report said.
With oil prices on the decline since 2014, the London-based company wants to focus on business areas with the highest returns such as LNG and deepwater oil production in Brazil and the Gulf of Mexico, the report added.
The news comes three days after Reuters reported that Shell is in advanced talks with an unnamed suitor over the sale of its onshore operations in Gabon. (See: Royal Dutch Shell in advanced talks to sell assets in Gabon)
In March, Shell decided to sell assets worth $30 billion in a bid to bolster its balance sheet, which ratings agency Fitch downgraded a month after the Anglo-Dutch oil giant completed its $49-billion acquisition of BG Group.
The latest sale plan comes after the London and Hague-based company sold assets worth $20 billion between 2014-1015.
But Shell has hit hurdles in the sale process since oil prices have crashed and is currently hovering at around $47 a barrel. When Shell sold assets worth $20 billion in 2014-15, oil prices were at around $100 a barrel.
So far this year, Shell has sold or agreed to sell around $6 billion of assets.
Plummeting crude prices have hit oil companies across the world and slashed earnings of other oil majors, including Exxon Mobil Corp and BP Plc, retarding investments in new oil exploration while at the same time hitting investor returns.
The London-listed company, like other rivals, has scaled down on spending on new projects. It recently announced that it would reduce its planned capital spending over the next three years by $15 billion.
Shell operates the giant Majnoon field near Basrah in southern Iraq which started production in 2014.
In 2010, the Iraqi ministry of oil and Shell signed a contract to develop the Majnoon oil field. Shell holds 45 per cent stake, Malaysian oil giant Petronas holds 30 per cent and the remaining 25 per cent with Iraq's state-owned Missan Oil Company.
Iraq accounted for around 4.4 per cent of Shell's total oil and gas production in 2015, according to its 2015 annual report.
