Shell Exits Malaysia LNG Venture, To Sell Norwegian Stake For $556m

Shell Gas Holdings (Malaysia) has completed the sale of its 15percent stake in Malaysia LNG Tiga (MLNG Tiga) to the Sarawak State Financial Secretary (SFS) for $750 million, according to Offshore report.

SFS is a shareholder of MLNG Tiga shareholder, and now has a 25percent interest in the venture. The other shareholders are Petronas (60percent), Nippon Oil Finance (Netherlands) with 10percent, and Mitsubishi subsidiary Diamond Gas (Netherlands) with 5percent.

Petronas subsidiary Malaysia LNG operates MLNG Tiga, which receives gas from various fields offshore Sarawak, as part of the larger Petronas LNG complex in Bintulu.

In a related development, Shell has agreed to sell its 44.56percent operated interest in the Draugen field in the Norwegian Sea and its 12percent stake in the Gjøa field in the North Sea to OKEA for $556 million.

Subject to regulatory approval the deal should be completed in 4Q, with OKEA becoming Draugen’s new operator, according to Offshore.

Shell will retain liability for 80percent of the field’s anticipated decommissioning costs post-tax up to an agreed cap of $78 million. OKEA will take on remaining liability.

The transferred share of production from the two fields totalled around 25,000 boe/d last year, roughly 14percent of Shell’s Norwegian production.

“This deal is part of Shell’s global, value-driven $30-billion divestment program and is consistent with our strategy to high-grade and simplify our portfolio,” said Andy Brown, Shell’s Upstream Director.

Rich Denny, Managing Director of A/S Norske Shell, said: “We are happy that OKEA’s ambition is to uphold and strengthen Draugen’s footprint in mid-Norway.

“They will also be welcoming transferring staff in Kristiansund and Stavanger in order to leverage their substantial experience and competence for the safe and efficient operation of Draugen in the future.

“This deal is a good strategic move for both companies. Draugen has been a defining asset for Shell in Norway, and we are confident it will prove to be similarly important to OKEA as a springboard in further developing their operating capabilities on the Norwegian continental shelf.”

Shell stressed that it remained committed to Norway, operating the offshore Ormen Lange and Knarr fields and partnering in Troll, Valemon, and Kvitebjørn. In addition, the company is drilling two exploration wells on the Norwegian continental shelf this year.

According to Wood Mackenzie, the deal would push OKEA up to 19th in the rankings of Norwegian producers. It will also lift the company’s net resources from 11 to 53 MMboe, and provides an operations center in Kristiansund.

The company will finance the transaction through a combination of underwritten bond loan and equity. Bangchak Corporation PCL, a Thai downstream oil and gas company, in partnership with Seacrest Capital Group, will jointly provide the finance.

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