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Shell protects interests in drilling rig takeover

Daily Telegraph

Shell has protected crucial oil drilling interests in a deal involving two of the biggest companies in the business.

By Roland Gribben
Published: 5:30AM BST 29 Jun 2010

Noble, the most important in the market after Transocean, is paying $2.16bn (£1.43bn) cash for Frontier, a Norwegian rival which has been developing a powerful new drilling vessel for operations in deep water and the Arctic in conjunction with Shell.

The deal comes against the background of the BP oil spill disaster in the Gulf of Mexico and the freeze on further offshore US drilling development imposed by President Obama in the immediate aftermath of the Deepwater Horizon explosion.

Shell has been closely involved with Frontier in designing the ‘Bully’ rig, a new drillship concept said to set a new and lower cost standard for drilling in hostile waters. The first of two ships is due to be delivered later this year.

Noble will take over responsibility for the programme and has signed conditional 10-year contracts with Shell for the two ships worth $4bn in hire charges over a 23 year period. But Shell has negotiated the right to suspend contracts in the event of difficulties tied to the offshore drilling moratorium.

Peter Voser, Shell chief executive, said yesterday that the Anglo-Dutch group wanted to increase offshore exploration and re-affirmed that it would have used different drilling techniques to avoid a repeat of the huge BP spillage.

He told a Capetown conference audience: “We would not have drilled the well in the same way. We have got other safety procedures across the globe.”

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