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Shell advises JPMorgan to sell $1bn NZ oil portfolio

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BRIDGET CARTERMergers & Acquisitions Editor, Sydney

GRETCHEN FRIEMANNMergers & Acquisitions Editor, Sydney

19 August 2016

Shell has called on investment bank JPMorgan to offload its $1 billion-plus portfolio of oil exploration and production assets in New Zealand, with some analysts questioning whether Australian players will express interest in the offering.

It comes as part of a global selldown by the oil and gas giant, which signalled a retreat from various markets, amid a $US30bn ($39bn) global asset sale plan following its $US50bn takeover of BG Group.

Some question whether the $1bn Beach Energy could be a potential buyer of some assets, although others say it may be a stretch to assume it was on the radar of the local oil and gas explorer.

Still, Beach’s new chief executive, Matthew Kay, is said to be acquisitive.

Others expect private equity firms to circle the portfolio, which is said to be too large for any New Zealand parties to own entirely and likely to be subject to a breakup.

The family-owned Todd Corporation, currently a partner on some assets, could be a buyer.

The latest move for JPMorgan to land the mandate comes after it sold Shell’s

Maui gas pipeline last year to First State Investments for $NZ335 million.

Shell describes itself an industry leader in oil and gas exploration and production in New Zealand, with its ventures accounting for about half of the country’s total natural gas production and a significant proportion of its light oil production.

Overall, New Zealand’s oil and gas industry contributes $2.5bn to the nation’s gross domestic product.

The oil company’s assets are located in the Taranaki region on the west coast of the North Island, including 83.75 per cent of the Maui gas field, half of Kapuni, which is New Zealand’s oldest gas field, and 48 per cent of the Pohokura field, which began production in 2006 and now meets about 40 per cent of the country’s natural gas requirements.

It also owns 50 per cent of Shell Todd Oil Services.

The move by Shell to distance itself from the New Zealand market comes as the global oil major is also expected to sell down its remaining 13.3 per cent stake in Australia’s $24bn Woodside Petroleum and after it sold its New Zealand petrol stations to Z Energy about six years ago.

Some are now questioning the motives of another oil major, Exxon, which is divesting Bass Strait assets, comprising oil and some gas.

While Exxon has been adamant that it is not staging an entire national exit, some market watchers are betting it could be the start of a five-year plan to exit the Australian gas market.

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