Shell and Saudi Aramco signed on Thursday a preliminary agreement to pursue gas projects worldwide, as the Anglo-Dutch supermajor is increasingly betting on natural gas production and Aramco seeks to expand its gas business.
"It is a discussion that began some time ago and now we have signed a memorandum to work on gas projects from upstream to downstream across the world and in Saudi Arabia. Concrete projects would be announced in due course," Shell's CEO Ben van Beurden told Reuters after the signing ceremony for the memorandum of understanding (MoU).
The preliminary deal was signed during the visit of Saudi Crown Prince Mohammed bin Salman in London, where he is expected to discuss, among other economic projects, the pitch of the London Stock Exchange to host the international listing of Saudi Aramco, expected to be the world's biggest initial public offering (IPO) in history. UK officials don't expect an imminent announcement of Saudi Arabia's decision on the international venue for the listing, a person familiar with the plans for the Crown Prince's visit told Bloomberg on Wednesday.
Aramco's intention to expand its portfolio with gas projects in Saudi Arabia and abroad could boost the valuation of the company ahead of the listing, currently expected in the second half of this year, although Saudi Energy Minister Khalid al-Falih hinted on Thursday that the IPO could slip into 2019.
For Shell, new gas projects fit very well into its plans to have a more gas-weighted portfolio in the future.
"A major contribution we can make right now is to continue to expand the role of natural gas, which makes up half of our total production," CEO Ben van Beurden said in a new Shell report released on Thursday.
Earlier this week, van Beurden told the CERAWeek conference in Houston that meeting Shell's target to cut greenhouse gas emissions "could mean switching the company's product mix of oil and natural gas from 50 percent gas to 75 percent."
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More