Royal Dutch Shell has sold its stakes in two Australian natural gas projects to Kuwait's state-run energy giant as the Dutch company saw capital expenditure rise to a record $44 billion last year and projects are now under review.
Shell announced the sale of $1.1 billion in Australian gas assets, including its 8% stake in the Wheatstone-Iago join venture and its 6.4% stake in the Wheatstone liquefied natural gas (LNG) project in Western Australia to Kuwait Foreign Petroleum Exploration Company (KUFPEC), a subsidiary of the state-owned oil company.
"Shell will remain a major player in Australia's energy industry," Shell Chief Executive Officer Ben van Beurden said in the statement. "However, we are refocusing our investment to where we can add the most value with Shell's capital and technology."
Originally, Shell planned to invest some $50 billion in Australian LNG, but as capital expenditures rise, and with the Wheatstone project expected to cost around $29 billion, Shell is reviewing its portfolio.
Wheatstone, one of the super-sized Australian LNG projects due to come on stream over the next few years, is about 25% complete. Some 80% of Wheatstone's future production is committed to Asian buyers, with Chevron the controlling partner in the project.
The purchase of Shell's Wheatstone assets is part of OPEC-member Kuwait's plan to diversify holdings abroad.
Shell issued a significant profit warning for the fourth quarter, in which it detailed across-the-board problems, less than three months after its third-quarter profits undershot analyst forecasts.
In December 2013, Shell announced it would sell up to $30 billion in assets this year. Weak refining margins and the plague of oil theft from pipelines in Nigeria have caused a fall in profits.
Shell is also looking to divest a $7 billion stake in Woodside Petroleum, the second-largest oil and gas producer in Australia, after already selling a $3.3 billion in this holding in November 2010.
More than 400 Shell gas stations across Norway may also be up for grabs in the divestment, while reports have also surfaced that Shell could consider selling $2 billion in assets in Nigeria's Niger Delta, among other major holdings in its portfolio.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com More