THE SCOTSMAN: Shell to sell North Sea assets: “SHELL has slapped a "for sale" sign on three of its North Sea oil fields, with several more expected to come on to the block in the next two years.”: “It needs money to fund a $45bn spending plan, designed to replace rapidly falling reserves.” (ShellNews.net) 21 April 05
DEPUTY CITY EDITOR
SHELL has slapped a "for sale" sign on three of its North Sea oil fields, with several more expected to come on to the block in the next two years.
The energy giant teamed up with partner Exxon-Mobile to put the assets on to the market, a move expected to attract a frenzy of bids from companies from Europe to North America.
A large-scale withdrawal from the North Sea has been threatened since February, when Shell said it wanted to raise $12-$15 billion (£6.3-£7.8bn) from disposals in each of the next two years. The area is viewed as a mature territory and the oil majors are looking elsewhere.
An oil industry insider said the announcement was merely "the thin end of the wedge" for Shell, which he believes will look to sell around half of its 30-odd North Sea assets. However, the firm is likely to offload only the least-producing fields and last night it reiterated its commitment to the UK region as a whole.
The fields up for grabs - Auk, Fulmar, and Dunlin, which includes the smaller Merlin and Osprey fields - hold over 30 million barrels of oil and currently produce around 11,000 barrels of oil equivalent per day, or 2 per cent of Shell’s UK output. Estimated values of the five fields run up to $15bn - although Shell would get only around half that.
Oil consultant Charles Westwood noted that the high oil price made it a "sensible time" to be hiving off assets and the $50-plus average is expected to tempt firms from across the globe. Of existing North Sea players, Paladin and Canadian firm Talisman are certain candidates, while the auction will also attract new independents.
Graham Tran, of union Amicus, welcomed the move, saying it was key that the North Sea was "in the hands of those prepared to invest". The big three oil majors (Shell, BP and Exxon) have been criticised in recent years for sitting on assets while they explored new markets while more eager firms have been left stuck on shore.
Shell echoed the words of its union, saying the decision to put the fields on sale was in order to "unlock their potential and extend their life". Currently, all three are expected to cease production by 2012.
The oil giant would not refute the industry-held view that there would be further disposals, saying that "buying and selling assets is a part of our business". It needs money to fund a $45bn spending plan, designed to replace rapidly falling reserves.
The fields employ 470 workers, with 86 paid directly by Shell. The firm pumps 500,000 barrels a day from the UK side of the North Sea and has pledged to hold investment at $6-7bn a year across Europe as a whole.
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