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Shell share price: Oil major sells downstream assets

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by Veselin ValchevMonday, 02 Nov 2015

Royal Dutch Shell Plc (LON:RDSA) announced today that it has completed the sale of two assets from its downstream portfolio as part of its strategy to divest lower-margin businesses, as profits wane amid the depressed oil price.

The Hague-based oil major has completed the sale of its Butagaz liquefied petroleum gas (LPG) business in France to DCC Energy for €464 million (£332 million).

The sale follows a binding offer received by Shell in May, in addition to consultation with staff and regulatory approval, the company noted.

Separately, Shell said it has completed the sale of its 75 percent stake in Tongyi Lubricants in China to Huo’s Group and The Carlyle Group. The details of that transaction are confidential, Shell said.

“Both divestments are consistent with Shell’s strategy to concentrate its downstream footprint on assets and markets where it can be most competitive, and to divest its LPG businesses worldwide,” the company said.

Today’s announcement follows a disappointing $6.1 billion loss for the third quarter, reported by Shell last week. The poor result was primarily caused by Shell’s withdrawal from two major projects – the exploration campaign in the Arctic and an oil sands development in Alberta, Canada. Shell incurred $4.6 billion in costs from exiting the two projects.

Chief executive Ben van Beurden noted that shelving the two projects were “difficult, but impactful decisions”, and that they will allow Shell to become a more “focused and competitive company”.

Shell’s share price had dipped 0.30 percent to 1,685.00p as of 08:34 BST today, broadly in line with the FTSE 100. The company’s stock has edged nearly five percent higher over the past month, but it is still more than 24 percent in the red on an annual basis.

As of 08:51 GMT, Monday, 02 November, Royal Dutch Shell Plc ‘A’ share price is 1,683.00p.

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