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Shell to use Woodside stake sale to fund its own projects

February 23, 2011

SHELL Australia chairwoman Ann Pickard says the Anglo-Dutch giant is selling down its major stake in Woodside Petroleum so it can use the money to develop its own suite of projects in Australia.

But Ms Pickard yesterday brushed off questions about whether Shell would soon sell its remaining $8 billion Woodside shareholding to a strategic investor after its shock move last November to reduce its stake from 34 per cent to 24 per cent.

The sale angered Woodside chief executive Don Voelte and chairman Michael Chaney because they were not given advance notice.

Amid speculation that BHP Billiton or another major company could swoop on the remaining 24 per cent, Mr Voelte revealed on Monday that Woodside was in talks with Shell over any move to bring in a new strategic investor. “It’s early days, but I’ll just say I would hope that we’re not surprised with the other 24 per cent,” Mr Voelte said.

Ms Pickard told an Australian Institute of Company Directors lunch in Perth yesterday that Woodside was now a “stand-alone” company and Shell wanted to focus on its own pipeline of projects in Australia.

This included the $10bn Prelude floating LNG project in Western Australia.

“I would say 20 years ago, maybe even 10 years ago, Woodside needed Shell and Shell needed Woodside,” Ms Pickard said. “Woodside now is a pretty darn good stand-alone company.”

Ms Pickard said Shell’s thinking had changed when it became clear it would be unable to buy Woodside following the Howard government’s rejection of a takeover bid in 2001.

“We hoped Woodside would be the vehicle (to develop projects in Australia) but when it became clear Woodside couldn’t be the vehicle we decided to develop our own projects,” she said.

“We’ve got a bunch of projects coming forward and obviously we’ve got to fund those projects some way or another.”

Ms Pickard described Shell’s refineries business globally as “very, very challenging” and suggested the company could exit its downstream operations in Australia, particularly if a carbon tax was introduced.

“It’s a global business for us,” she said. “We continue to look at the Australian refineries just like we look do our refineries in the United States, Singapore and every place else in the world

“Right now I’m pretty happy with the situation, but all of a sudden if you see a big tax on these things without compensation, the world can change.”

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