Royal Dutch Shell Plc  .com Rotating Header Image Shell Mulls Sale Of Australia’s NW Shelf Oil Assets – Sources

November 14, 2007: 12:44 AM EST

SYDNEY -(Dow Jones)- Royal Dutch Shell PLC (RDSB.LN) is considering the sale of its oil assets in Australia’s North West Shelf, two people familiar with the matter said, in a move set to attract Chinese interest.

Shell is examining the potential value of its 16.67% stake in the oil output arm of the North West Shelf project, namely the Cossack Pioneer field, which produces 100,000 barrels of crude a day, the people said.

Another person said Cnooc Ltd. (CEO) has hired Macquarie Group Ltd. (MQG.AU) to examine a possible bid for Shell’s oil assets in the North West Shelf, and China’s number-three oil producer may pitch an offer around $450 million.

A disposal would free up Shell to focus on its Australian natural gas business, which includes the giant Gorgon gas field off the Western Australian coast that recently won federal approval.

According to one of the persons, Shell isn’t in active talks to sell the stake at present and is still considering its exit plan. The Anglo-Dutch oil major has said it expects to offload about $9 billion in assets in 2007.

Shell spokeswoman Anita Harben declined to comment on whether the company’s North West Shelf oil assets could be sold, saying such issues were commercially confidential.

But she added, “Portfolio management is a key source of value creation for Shell. We continue to focus our portfolio on strategic assets and remain committed to liquefied natural gas growth in Australia.”

Cnooc spokesman Xiao Zongwei also declined to comment, while a spokesman for Macquarie wouldn’t immediately respond.

The North West Shelf project is operated by Woodside Petroleum Ltd. (WPL.AU) and counts BHP Billiton Ltd. (BHP), BP PLC (BP), Chevron Corp. (CVX) and Japan Australia LNG as equal shareholders in addition to Shell.

It’s not known whether any of the parties have a pre-emptive right to buy another shareholder’s interest in the venture should it be marketed.

Cossack Pioneer began producing oil in 1995 after the first commercial oil discovery was made off the North West Shelf in 1989. A total of 10 production wells have been drilled in water 80 meters deep.

Oil produced at the North West Shelf is exported from a floating production, storage and offloading facility via shuttle tankers to international markets, according to the Woodside Web site.

Crude oil output at the North West Shelf has been declining in recent years, with a total of 31.4 million barrels produced in 2005 compared with 39.3 million barrels two years earlier.

Chinese interest comes a month after Yang Hua, Cnooc’s chief financial officer, pinpointed the Asia-Pacific region as one of two areas where Cnooc wanted to build its core business.

The Chinese company already has a 25% stake in the China LNG venture, which was established to deliver LNG from the North West Shelf to China’s only operational LNG terminal at Dapeng in the southern province of Guangdong.

In July, Cnooc strengthened its footprint in Australia by securing a permit to explore in the Bonaparte Basin, off Western Australia.

Overseas oil production currently accounts for around 12% of Cnooc’s total output, although this is likely to jump next year when the first commercial oil is pumped at the Akpo oil field in Nigeria. Cnooc bought a 45% stake in the Akpo field early last year.

-By David Winning and Benoit Faucon, Dow Jones Newswires; 8610-65885848; [email protected]; [email protected]

(Stephen Bell and Rebecca Thurlow contributed to this story)

  (END) Dow Jones Newswires
  11-14-07 0044ET
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