Daily Express (UK): Shell slims down in £lbn gas pipeline sale: “OIL giant Shell is selling a gas pipeline business for nearly £1 billion as part of moves to focus on more profitable exploration and production.”: “The sell-off follows a series of shock downgrades to the company's oil reserves since January this year.” (ShellNews.net)
By Andrew Johnson
2 Nov 04
OIL giant Shell is selling a gas pipeline business for nearly £1 billion as part of moves to focus on more profitable exploration and production.
The company will sell its share of Gasunie — a company it runs as a joint venture with American oil group Exxon — to the Dutch government if the move is approved by the country's parliament. The deal is worth €2.78 billion (£1.93 billion), which will be split equally between the two oil majors.
Analysts said the proposal — outlined in a letter from Dutch ministers to the country's parliament — could improve competition hi European gas markets and play a role in controlling UK gas prices.
The Dutch government would rent out the Shell/Exxon network to other gas suppliers whose entry into the market would be expected to drive down prices.
A lack of competition in Europe has been blamed for higher prices in the UK as this country becomes more dependent on continental gas.
Gasunie is involved hi plans to build a gas pipeline from Holland to a terminal in Bacton,
Norfolk "The Dutch network could be strategically important for UK gas supplies as North Sea production declines," said Brian Little, of consultant Energy Markets.
"The Netherlands is an important exporter, especially when demand is higher in winter."
Shell's sell-off of the pipeline has been mooted since 2000 and it is now forming part of a massive disposal programme being carried out by Shell to help pay for its $45 billion (£24.5 billion) investment plan.
The sell-off follows a series of shock downgrades to the company's oil reserves since January this year.
Michael O'Callaghan, chief executive of Shell Energy Europe; said: "The envisaged agreement is a further milestone 'in our strategy of active portfolio management."
Shell will continue to profit from some parts of the business. While the Dutch government will own all the gas pipelines, storage tanks and other assets, Shell and Exxon will each continue to hold 25 per cent of Gasunie's retail side. Shell shares rose l.25p to 430p.