Giant sells Wheatstone stake for US$1.1b

giantMULTINATIONAL Royal Dutch Shell has struck a deal with the Kuwait Foreign Petrol Exploration Company (KUFPEC) to sell its stake in WA’s Wheatstone LNG project for US$1.135 billion.
The move was part of a new drive by the company to offload US$15 billion worth of assets through 2014 and 2015 after its finances took a beating last year.
Shell will sell its 8 per cent equity interest in the Wheatstone-Iago joint venture and its 6.4 per cent interest in the Wheatstone Project to the Kuwaiti state company, subject to closing.
The deal will take KUFPEC’s share in the Wheatstone Project to 13.4 per cent, making it the second biggest stakeholder behind Chevron.
Shell said the agreement would ensure there was no impact on existing commercial agreements.
At the time, Shell chief executive Ben van Beurden said the company would remain a major player in Australia’s energy industry.
However in its fourth quarter and full year 2013 results, released a week after the announcement, Shell said it had received indications of interest to acquire its refining and parts of its marketing portfolio in Australia.
“The company is considering its options for divestment, subject to achieving satisfactory commercial terms for these positions,” it said.
Shell’s cost of supplies earnings dropped to US$16.74 billion in 2013, down a massive 38 per cent from the US$27.16 billion made in 2012.
The drop has prompted a change of strategy within Shell, with Mr van Beurden admitting Shell had “lost momentum” in 2013 and needed to “sharpen” its performance.
Mr van Beurden said the company was postponing a final investment decision (FID) on its Arrow LNG project in Queensland and was not expecting any FIDs on Asia Pacific LNG in 2014.
“We will go ahead with the most attractive investments on behalf of our shareholders but we need to make hard choices on pre-FID options and non-core assets,” he said.
“We didn’t like the economics and inflation risks on [the Arrow] proposal.”
Mr van Beurden, who took the helm at Shell at the start of the year, said its 2013 performance was not what he expected from the company.
“Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery,” he said.
Mr van Beurden refused to comment on speculation Shell was looking to sell its 23.1 per cent share in Woodside Petroleum.