Shell exits Australian LNG project following profit warning

Δημοσιεύθηκε: 20 Ιανουαρίου 2014 - 14:56

Royal Dutch Shell is to leave the Wheatstone gas project in Australia after selling its stakes to the Kuwait Foreign Petroleum Company for $1.14bn to focus on larger investments in the country.

Ben van Beurden, Shell chief executive, said the disposals were evidence of "hard choices" being taken at the Anglo-Dutch oil major that on Friday warned profits for 2013 would be "significantly lower" than expected. It blamed the profit warning - its first in 10 years - on continuing woes in refining, security problems in Nigeria and higher exploration costs.

Under the terms of the deal announced on Monday, Shell is selling its 8 per cent stake in the Wheatstone-Lago joint venture and a 6.4 per cent interest in the related 8.9m tonnes a year Wheatstone liquefied natural gas (LNG) project.

Australia is key to Shell's LNG growth globally. Its most ambitious project in the country is its floating LNG project, Prelude. Once operational it will allow the company to tap potentially stranded gas deposits out at sea and transport it to customers without the need for local processing on shore before shipping.

"Shell will remain a major player in Australia's energy industry," said Mr van Beurden. "However, we are refocusing our investment to where we can add the most value with Shell's capital and technology. We are making hard choices in our worldwide portfolio to improve Shell's capital efficiency."

Shell said last year it would step up disposals in 2014 and 2015 to keep cash coming in. It is expected to reveal further details when it presents its full-year results next week. The world's big oil and gas groups are under increasing pressure from investors to rein in capital spending as costs have risen.

The disposal came as the oil group announced that Andy Brown, who runs all of its exploration and production (upstream) outside of the Americas, was taking extended sick leave. Mr Brown, who became head of upstream operations in 2012, is understood to have undergone a heart operation.

The company gave no firm date for his return but said Maarten Wetselaar, executive vice-president integrated gas and former head of finance for upstream international, would serve as acting upstream international director, in addition to conducting his regular duties.

Shares in Shell were down just under 0.4 per cent to £21.66 in afternoon trading in London.

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