Former Centrica boss in talks to buy Shell oil assets

By Jillian Ambrose, business reporter: 27 MARCH 2016

A $5bn investment fund, led by former Centrica boss Sam Laidlaw, is in talks to snap up assets from Shell’s $30bn oil and gas divestment drive.

Neptune Oil and Gas was launched last summer to hunt for oil and gas bargains, and has confirmed that it is in talks with Bank of America Merrill Lynch to take advantage of Shell’s ambitious sales plans.

A spokesman for the fund said that Shell’s assets are being considered as part of its wider strategy to target large-scale investment in distressed assets in the North Sea, North Africa and South East Asia.

Shell is under pressure to push through the hefty disposals in order to shore up its balance sheet after it paid £40bn in the controversial BG Group merger, which was agreed before the full brunt of the oil market’s 80pc collapse slashed value across the sector.

Earlier this month Shell said it had appointed investment bank Lazard to advise on its ambitious plans to sell off $30bn-worth of assets in the next three years.

So far Bank of America Merrill Lynch and Morgan Stanley have taken the lead on specific asset sales, Shell said.

Last year the oil major’s divestments amounted to $5.5bn to bring its 2014-2015 total to $20bn, above its initial target of £15bn for the period.

But analysts have cautioned that the firm may struggle to offload further assets as rivals cut back on spending and consider asset sales themselves.

Shell is expected to ‘backload’ the sale of its assets towards the end of the three year period when oil prices are likely to have regained ground. Shell has also said it will focus its disposals on business areas which are “oil price insensitive”.

Allianz Global Investors energy boss Chris Wheaton told the Telegraph in February that Shell’s oil and gas production sales will be limited to no more than 10pc of the $30bn target.

Even this will be difficult to achieve “when every oil company has assets for sale,” he said.

Mr Wheaton said Shell should be able to divest $10bn of “easy to sell” assets in its refining, lubricants and chemicals business interests. Another $10bn of sales could come from selling off pipelines, he said.

In addition to its planned asset sales Shell has embarked on an aggressive round of job cuts which will axe 10,000 in total from its global business, most of which have already be made. Around 2,800 job cuts will follow in the next few months, the company has said.

A Shell spokesman said the company would not comment on when the jobs cuts will be made, or on specific sales talks carried out by the banks acting on its behalf.

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