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Shell’s departure from Denmark’s refining business canceled

Shell says operations at a refinery in Denmark will continue under its logo after a 2016 agreement terminated without a sale. File photo by akiyoko/Shutterstock.

By Daniel J. Graeber  |  Jan. 2, 2018 at 7:20 AM

Jan. 2 (UPI) — A $30 billion divestment program will be completed this year even after an agreement to sell a Danish subsidiary dissolved, Royal Dutch Shell said Tuesday.

Shell said an agreement signed in late 2016 with refiner Dansk Olieselskab terminated without the sale completing and operations would continue as usual under the Dutch supermajor’s banner.

“Shell Group’s $30 billion divestment program remains on track to complete in 2018, with deals worth $23 billion completed, $2 billion announced and $5 billion in advanced progress,” the company said in a statement.

When it announced the agreement in September 2016, Shell said it would take in about $80 million in capital by leaving the Danish refinery sector behind. The agreement included the Fredericia refinery that has the capacity to handle 70,000 barrels of product per day.

Shell has plans to leave oil and gas operations in as many as 10 countries, while focusing more heavily on gas-rich Australia and shale opportunities in the United States. Mounting financial pressures brought on in part by lower crude oil prices and obligations following its merger with British energy company BG Group led the company to call for “lasting changes” in its operations.

In mid-November, however, the company said it was taking $1.7 billion for the sale of a 64 percent stake in Woodside Petroleum, leaving its Australian subsidiary with a 4.8 percent interest in the liquefied natural gas player.

For cash flow, the company said in its third quarter report that its outlook was around $30 billion by 2020 so long as the price for Brent crude oil, the global benchmark, stays around $60 per barrel. That forecast is $5 billion more than it expected in June 2016.

Cash flow over the last five quarters has been strong enough for Royal Dutch Shell to start returning some of that to investors.

The company offered no explanation for why the Denmark agreement closed without a final sale. 

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