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Shell’s New Zealand review sign of rationalisation as BG merger moves closer

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Screen Shot 2015-11-20 at 08.55.47Written by Niamh Forrest – 11/12/2015 7:41 am

Oil major Shell is shifting to portfolio rationalisation as the move to a merger with BG Group nears one step closer, according to a leading analyst.

Tom Ellacott, from Wood Mackenzie’s Corporate Analysis team, said a combined portfolio between the two companies will now be defined by its geographical reach.

He said up to five country exits could be on the cards.

Shell has been in New Zealand for more than 100 years with an 84% stake in the Maui field.

It also has a 50% stake in the Kapuni field and a 50% stake interest in Shell Todd Oil Services.

Ellacott said: “As the Shell/BG deal edges closer to completion, Shell’s focus is shifting to portfolio rationalisation.

“The combined Shell / BG portfolio will be distinguished by its geographical reach, which will span 42 upstream regions versus 28 for Euro Major peer BP.

“The company has outlined a US$30 billion asset disposal programme to streamline the portfolio, reducing geographical diversity and concentrating its efforts on the LNG and deepwater sectors.

“In addition to tail-end asset sales at least five country exits could be on the cards, targeting non-core regions generally characterised by mid-to-late life operations.

“Downstream and midstream sales are also expected to feature heavily in the divestment programme.”

The review of Shell’s assets in New Zealand is expected to take a number of months.

Chairman of Shell New Zealand, Rob Jager, said no sale process had been launched with all options for assets currently being looked at.

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