Shell to sell some North Sea oilfields to raise under divestment programme

Royal Dutch Shell PLC plans to sell some its North Sea oilfields under a $15-billion divestment programme, the Financial Times reported yesterday, citing a person close to the company.

According to the newspaper, Shell planned to sell some of its mature upstream assets in the North Sea and other areas, part of its refining operations and some operations that had not reached final investment decisions

The company declined comment on the possible divestment of assets.

Shell had recently announced strategic reviews of its shale business and its Nigerian assets.

It had also taken a decision to hold back on the development of a multi-billion dollar gas-to-liquids plant in Louisiana.

The company spent $45 billion in 2013, $5 billion in excess of its earlier guidance, prompting certain questions over the company's plans for 2014.

The company, however, still expects to hit its target of $130 billion in capital expenditure between 2012 and 2015.

Shell and its industry peers are coming under increasing investor pressure to cut back on spending as costs increase and prospects for oil prices wane.

The Anglo-Dutch company said in October that  divestment would increase "significantly" in 2014 and 2015 to keep cash flowing in, after it forecast that 2013 capital expenditure would peak at about $45 billion.

According to analysts and bankers, some of the company's Nigerian oil blocks plus Shell's 23.1 per cent stake in Australian group Woodside Petroleum - worth over $6 billion at current prices - could be put on the block.

Reuters quoted Santander analyst Jason Kenney as saying, it would not surprise him if Shell were to sell some North Sea assets.

He added, in the North Sea, something like 80 per cent of its production came from 20 per cent of its asset base so there was a long tail of smaller positions.

After Van Beurden, Shell's new chief started working alongside outgoing boss Peter Voser at the beginning of the fourth quarter, the company had cancelled plans for building a gas-to-liquids (GTL) plant in the US, which raised investor hopes of a tighter spending regime.

According to Kenney, he expected Shell under Van Beurden to focus on capital discipline, better returns and sale of peripheral assets.