Shell (one of the world’s largest oil and gas companies) has completed its exit from some non-operating stakes in Malaysia in parallel with its plans to complete another asset sale in Indonesia.
The sale relates to two unoccupied blocks at the Bram Delta oil and gas project in Malaysia, according to the Energy Voice website.
The sale was made through Sarawak Shell Parade, a subsidiary of the parent company listed on the London Stock Exchange, after obtaining official approval from the regulators in Malaysia.
Bram Delta Project
The sale covered Shell’s non-operating stake of 40% in one block of Malaysia’s Bram Delta project, and 50% in a second attached block, according to the specialist energy platform.
The sale comes within the framework of a deal concluded by the Sarawak Shell Pirade Company to transfer offshore production sharing contracts in the region to the Sarawak Exploration and Production Petroleum Company during the past year as part of a process extended since March 2021.
Shell (present in Malaysia since 1997) was awarded the contracts for the Delta Bram field in 2012, and then signed subsequent contracts in 2016 and 2019 to extend its life and increase its production.
And it participates with Shell in the Delta Pram project, the Malaysian national Petronas company, through its acquisition of the remaining stakes of 60% in one of the blocks from which Shell will exit, and 50% in the second block.
$475 million
The value of the deal is approximately $475 million, in addition to other payments amounting to $50 million, which will be disbursed during the years 2023 and 2024 at current prices, according to the terms announced in December 2022.
Shell still maintains 19 operating companies throughout Malaysia, indicating that it will continue to maintain its strong presence in the exploration and production sector and gas liquefaction, in addition to the refining and marketing sectors in Malaysia.
Shell’s Director of Exploration and Production, Zoe Yujnovic, said that the Malaysian oil and gas sector will remain one of the eight most important sites that the company relies on globally.
Jojnovic stressed that Shell will continue to help Malaysia develop its much-needed oil and gas sector at the present time, in addition to helping it transition to producing low-carbon energy sources.
Selling assets in Indonesia
The sale of some of Shell’s assets in Malaysia comes as part of broader plans to rearrange its non-core investment portfolios, in preparation for plans to move towards producing low-carbon energy sources.
Shell has been negotiating since last year to offer its stake in the offshore Masila Al-Abadi gas production project in Indonesia for sale.
Negotiations revolve around selling the 35% stake in the offshore block to the local Indonesian company Pertamina, amid expectations that it will be settled before June 2023, according to what was monitored by the specialized energy platform.
The Japanese company Inpex Corp. acquires 65% of the Massila Al-Abadi block, while Shell acquires the remaining 35% negotiable stake.
The biggest deal in 2023
If the nearly $1 billion deal succeeds, it will be the biggest deal of 2023, estimates Rystad Energy, a research and advisory firm.
Shell’s plan to exit some of its assets is not limited to Asian markets only, but extends to European markets as well, according to the vision of the new CEO, Wael Sawan.
Sawan, a Canadian of Lebanese descent, announced plans to comprehensively restructure Shell’s activities since taking over in January 2023.
Retail branches are threatened with exit
These plans include exiting retail subsidiaries in a number of European countries due to lower returns, particularly in the United Kingdom, the Netherlands and Germany.
The company has not yet taken a final decision to exit from these branches, with expectations that the issue will continue to be discussed for several months, until the completion of the work of evaluating the financial positions of the branches and submitting a detailed report on it to the Board of Directors to take its decision.
The list of Shell’s retail companies includes other branches in the United States and Australia, but it has not been proposed for exit or restructuring due to its different conditions from the European branches that suffer from the energy crisis more.
It is noteworthy that Shell recorded historical net profits exceeding $40 billion in 2022, which is the highest profit recorded since 2008, and the profit reference number is kept at $31 billion, according to what was monitored by the specialized energy platform.
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