Shell Expected to Sell $15 Billion of Assets During the Next Two Years

The Financial Times has released a new report claiming that Royal Dutch Shell, the world’s third largest energy company by market worth, will look to divest $15 billion worth of assets over the next couple of years.

Last October the company announced that it planned to sell off a significant number of assets in 2014 and 2015 in order to reduce liabilities and improve the flow of cash through the business.

The new Chief Executive Officer Ben van Beurden, who took charge just two weeks ago, is expected to sell off assets and oil fields in the North Sea, some of its refining portfolio, and a few projects currently still in their early stages.

Many of the large oil companies are facing pressure from shareholders to try and reduce spending as costs of projects continue to rise and the price of oil is expected to fall in the future.

Related article: What Does Shell’s Decision to Cancel GTL Plant Say about US Shale Gas Boom?

It has been suggested by industry analysts and some bankers that Shell may look to sell some of its Nigerian oil blocks, along with its 23.1 percent stake in the Australian production and exploration company Woodside Petroleum, which is estimated to be worth over $6 billion.

Jason Kenney, an analyst from Santander, told Reuters that he expects Shell to unload some of its North Sea assets. “In the North Sea, something like 80 percent of its production comes from 20 percent of its asset base so there's a long tail of smaller positions.”

Shell started with its divestment plan at the end of last year when Van Beurden, working in conjunction with the outgoing CEO Peter Vosser, announced the cancellation of a gas-to-liquids plant in the US. Shareholders were hopeful that it would be the beginning of a period of tighter spending and better cost control.

It is believed that Van Buerden will oversee a phase that focuses on capital discipline, higher returns, and divestment of non-essential assets.

By. James Burgess of Oilprice.com