Shell’s plans to cast off a number of North Sea assets will not be affected by its proposed £47billion “mega-merger” with BG Group, a Scottish oil and gas consultancy has said.
The Anglo-Dutch oil giant last week said it plans to buy Reading-based BG in a deal that would be the second biggest deal of its kind after Exxon and Mobil’s £51billion tie-up in 1998.
Analysts have said that the announcement could spark a rash of similar deals as companies look to consolidate against the backdrop of a low oil price environment.
Sources have said that Shell will cut 300 jobs in Aberdeen as the two firms strive to trim £1.6billion in costs annually, though the company said it “didn’t recognise” the figure.
Glasgow-based consultancy Hannon Westwood yesterday said recent assurances from Shell about its commitment to the North Sea and its plans to invest £4billion there between 2016 and 2018 are unlikely to change the firm’s field sell-off strategy.
Hannon Westwood, which has advised on £2.2billion-worth of investments in the last five years, said the divestments would mainly comprise “mature fields and planned developments where an investment decision has yet to be made” across the Shell and BG portfolio.
Early last year Shell said it would sell some of its upstream assets, namely, Anasuria, Teal, Teal South, Guillemot A and Cook, Nelson and Sean, and in July 2014 BG started restructuring its portfolio with plans to sell the Armada, Everest and Lomond fields.
The consultancy said these assets “will most likely still be considered for divestment”, before adding that “there is little in the way of potential new developments in the joint portfolio that would be considered to be either material or strategic to the merged entity”.
Hannon Westwood chief executive Ian Norbury, said: “Shell’s move to acquire BG has been expected for some time and obviously makes sound strategic sense.
“Shell has struggled with its worst production performance for over 15 years and several expensive dry holes internationally.
“The acquisition will increase Shell’s oil and gas reserves by almost 30%, will access a management team with a successful exploration track-record, and will position Shell as a key player in international LNG.
“Whilst the North Sea will remain a key production area, mature and non-strategic elements of the combined portfolio are likely to form part of the promised global asset sales”.
Both Shell and BG have declined to comment on Hannon Westwood’s statement.
Recommended for you
