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Royal Dutch Shell mulls exit from New Zealand

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Screen Shot 2015-11-20 at 08.55.47Angela Macdonald-Smith: 10 Dec 2015

Royal Dutch Shell is mulling a complete exit from New Zealand, putting all its oil and gas assets in the country under review for a possible sale that would likely fetch into the billions of dollars.

Country chairman Rob Jager said that while the New Zealand business was “great”, it is “a small part of the global Shell business and hence the decision to undertake a strategic review at this time.”

Shell already has a sale process underway for its stake in the Maui gas pipeline, with a teaser document sent to potential buyers by adviser JPMorgan in October. The pipeline is expected to fetch as much as $NZ300 million, but the rest of Shell’s business in New Zealand is much more extensive.

Shell owns 50 per cent of the Shell Todd Oil Services venture, as well as interests in several producing fields such as Maui, Pohokura and Kapuni, and in frontier exploration ventures in the Great South Basin far off the south-east coast, and in the New Caledonia Basin off the north-west.

Speaking to reporters on a conference call on Thursday morning, Mr Jager said the decision to review the NZ assets was “not directly linked to the oil price” but rather driven by Shell’s global strategy of seeking divestments from within its portfolio over the next three years.

The oil giant, which is close to tying up a $US70 billion takeover of BG Group, has flagged some $US30 billion of asset sales over the next three years.

Mr Jager said a small team of Shell staff and some external advisers would assess the various options for the assets, with the review to last “more likely months rather than weeks.” He wouldn’t pre-empt whether some assets my be kept, or whether all were likely to be sold. The sale process for the Maui pipeline will continue unaffected, he added.

About 70 staff are employed at Shell New Zealand, and about 360 at Shell Todd Oil Services, Mr Jager said.

Shell’s Australian business has also been streamlined in recent years, including the sale of its refining and marketing business, and its exit from Chevron’s Wheatstone LNG venture in Western Australia.

However, Australia remains a major part of Shell’s global portfolio, including its Prelude floating LNG venture, stakes in the North West Shelf and Gorgon ventures, the undeveloped Sunrise gas project and coal seam gas interests in Queensland.

Shell also still owns a stake in Woodside Petroleum, which is also seen a candidate for disposal given two sell-downs in the holding over the last five years.

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