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Reuters: Exxon, Shell to sell German gas network unit -report

Tue Aug 14, 2007 10:00AM EDT

DUESSELDORF, Germany, Aug 14 (Reuters) – Energy groups Exxon Mobil (XOM.N: Quote, Profile, Research) and Royal Dutch Shell (RDSa.L: Quote, Profile, Research) plan to sell their German natural gas network operator BEB in a deal worth billions of euros, an online German business magazine reported on Tuesday.

Citing industry sources, manager-magazin.de said the two oil companies had determined the joint venture was not a core business and said that the sale process was far advanced.

The companies declined to comment on what they called speculation.

BEB operates a gas network 3,100-km long with a transport volume of 30 billion cubic metres, it said, adding its base in northern Germany made it a key hub in European gas transport.

In 2004 Shell and Exxon agreed the sale of their interests in the Dutch gas transportation network to the Dutch government for 2.78 billion euros ($3.78 billion).

In recent years Shell has been selling billions of dollars worth of energy distribution and oil refining assets that it sees as offering low growth, so it can channel funds into new upstream growth areas in oil and gas production.

In Germany, just a few companies control the bulk of the gas transport infrastructure.

According to federal regulators, more than 75 percent of capacity is held by E.ON (EONG.DE: Quote, Profile, Research); RWE (RWEG.DE: Quote, Profile, Research); the Wingas venture of BASF (BASF.DE: Quote, Profile, Research) and Gazprom (GAZP.MM: Quote, Profile, Research); VNG unit Ontras and BEB.

E.ON Gastransport has the biggest network at around 11,000 km. RWE Transportnetz Gas has 6,800 km in lines.

More than 700 regional and municipal utilities distribute the gas to final customers.

(Reporting by Tom Kaeckenhoff in Duesseldorf, Jan Schwartz in Hamburg and Tom Bergin in London)

© Reuters 2007. All rights reserved.

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