Kufpec to buy Shell’s stake in Wheatstone LNG venture

This story was updated Jan. 21.

Royal Dutch Shell PLC reported it has agreed to sell its 8% equity interest in the Wheatstone-Iago joint venture and 6.4% interest in the 8.9-million tonne/year Wheatstone LNG project in Western Australia for a cash consideration of nearly $1.14 billion to Kuwait Foreign Petroleum Exploration Co. (Kufpec), subject to closing.

The acquisition virtually doubles Kufpec’s interest in the $29 billion (Aus.) LNG project to 13.4% from 7%. It will now hold the second-largest stake behind the project’s operator Chevron Australia, which has 64.1%. Other interest holders are Apache Energy 13%, Tokyo Electric Power Co. 8%, and Kyushu Electric Power Co. 1.46%.

Shell joined the Wheatstone LNG project as both gas supplier and equity participant in April 2011 following the signing of a unitization agreement with Chevron Australia (OGJ Online, Apr. 21, 2011).

The agreement with Kufpec ensures there will be no impact on existing commercial agreements, Shell said.

Shell’s decision follows a month of speculation that the company would sell Australian assets as part of $15 billion (Aus.) in worldwide asset sales over the next 2 years.

The speculation began when Van Beurden, Shell’s new chief executive, flagged the need for the company to divest noncore and underperforming parts of its business. The company has said its 2013 net profit worldwide could fall by 39% from the previous year. Official figures will be released on Jan. 30.

Wheatstone LNG falls into the noncore asset category—Shell holding under 10% of the project when the company generally holds much higher stakes in LNG projects.

Other Australian assets thought to be potential sales are the downstream oil refining and retail business and Shell’s remaining 23.2% stake in Woodside Petroleum.

Despite this, Van Beurden has said that Shell will remain a major player in Australia’s energy industry.

“We are refocussing our investment to where we can add the most value with Shell’s capital and technology. We are making hard choices in our worldwide portfolio to improve the company’s capital efficiency,” he said.

Shell owns a majority of the Prelude floating LNG project now being developed in the Browse basin off Western Australia and 25% of the Chevron Corp.-operated Gorgon-Jansz LNG project on Barrow Island. The company also is a one-sixth joint venture partner in the Woodside-operated North West Shelf LNG facilities.

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