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Reuters: Shell keen for more oil and gas deals with Norway

Thu Sep 6, 2007 12:16 PM BST

ABERDEEN, Scotland, Sept 6 (Reuters) – Royal Dutch Shell (RDSa.L: Quote, Profile , Research) aims for more investment in oil and gas exploration and production in Norway as it looks to sell off assets in the mature UK sector of the North Sea.

“We are keen to grow our presence in Norway,” Tom Botts, executive vice president Europe at Shell, said at an industry conference this week.

Botts was involved in cross-border talks with Norway that led to Shell’s involvement in the Ormen Lange gas project, due to begin delivering gas to the UK next month.

Shell is due to take over the production phase of the project from Norsk Hydro (NHY.OL: Quote, Profile , Research), which developed it. Shell is also the operator of Norway’s Draugen field.

Botts said Shell’s investment in the UK sector of the North Sea has been “stable” and was expected to remain so, but investment in Norway would increase.

Shell’s global investment budget for 2007 is around $22 billion-$23 billion, but the company does not give a break-down for particular regions, Botts said.

Shell has already begun marketing some of its assets in the UK North Sea, where some fields are nearing the end of their lives.

A number of smaller oil companies have moved in to exploit more mature UK North Sea fields, such as Canada’s Nexen (NXY.TO: Quote, Profile , Research).  

The assets up for divestment represent 4 percent of Shell’s European production and 8 percent of its UK production, but a more significant chunk of its European operating costs because they are late-life assets, Botts said.

He said the process would take many months, but interested parties were looking over the assets. “We hope to complete the sales next year,” he said.

The company has for now decided to keep its interest in its Brent fields and take them through to decommissioning.

Botts said: “Our current belief is we can see Brent through to end-of-field life probably as well as anybody can. It’s not finalised, but it’s the way we are leaning now.”

Shell is also active in the so-called Atlantic margin, which includes areas off the west coast of Ireland. “It’s less explored, but extremely high cost,” Botts said.

© Reuters 2007. All Rights Reserve

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