Shell to sell upstream assets in New Zealand to Austria's OMV for $578 mn
16 March 2018
Royal Dutch Shell Plc, Europe’s biggest oil and gas company, today struck a deal to sell its upstream assets in New Zealand to Austria’s OMV AG for $578 million.
Shell has so far sold or agreed to sell over $25 billion of assets as part of its three-year plan to sell assets worth $30 billion by the end of 2018, after it acquired BG Group in 2016 for $49 billion.
The current sale includes Maui, Pohokura and Tank Farms and Shell has also entered into an agreement with OMV to sell its interest and operatorship of the Great South Basin venture, which includes a drilling commitment currently estimated to be $50 million.
Post closing, Shell Taranaki and Shell New Zealand employees will become a part of OMV New Zealand.
“Today’s announcement is another step towards reshaping and simplifying our company, deepening Shell’s financial resilience and competitiveness, in order to become a world-class investment,” said Maarten Wetselaar, Shell’s Integrated Gas & New Energies director.”
“I want to emphasise that the business will continue to be run as it is now, until the deal is complete” says Rob Jager, country chair of Shell Companies in New Zealand. “We have two high priorities over this transition period: to continue to run our assets in a safe and reliable manner and care for our people.”
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 announced last year that it would reduce its planned capital spending over the next three years by $15 billion.
The British–Dutch multinational has hit hurdles in its $30 billion assets sale program since oil prices had crashed to a low of $49 a barrel and is currently hovering at around $70 a barrel.
When Shell sold assets worth $20 billion in 2014-15, oil prices were at around $100 a barrel.