Royal Dutch Shell Plc (NYSE: RDS.A) said Oct. 17 it will sell upstream interests in Denmark for $1.9 billion as part of the oil major’s larger divestment program.
Shell, through its affiliate Shell Overseas Holdings Ltd., reached an agreement with Oslo-listed Norwegian Energy Co. ASA (Noreco), to sell its shares in Shell Olie-og Gasudvinding Danmark B.V. (SOGU). The sale brings Shell to virtually complete a three-year divestment plan the company started in 2015 following the acquisition of BG Group, which included divestitures in the British North Sea, Gabon, Thailand and Canada.
Andy Brown, Shell’s upstream director, said: “Today’s announcement is consistent with Shell’s strategy to simplify its portfolio through a $30 billion divestment program, and contributes to our goal of reshaping the company into a world-class investment case.”
SOGU is a wholly-owned Shell subsidiary that holds a 36.8% nonoperating interest in the Danish Underground Consortium (DUC), a joint venture in the Danish North Sea. Other consortium members include Total SA (31.2%), Chevron Corp. (12%) and Nordsøfonden (20%).
DUC, which started production in 1972, currently operates 15 fields in the Central Graben sector of the North Sea. It covers nearly 90% of Danish oil and gas production, which averaged 182,000 barrels of oil equivalent per day (boe/d), according to Total (NYSE: TOT).
In late September, Chevron (NYSE: CVX) also agreed to sell its stake in DUC to French oil and gas major Total. The agreement followed Total’s acquisition earlier in the year of A.P. Møllers-Mærsk’s oil and gas activities, including the sole concession area and the role as operator in DUC.
The sale of Shell’s stake in the consortium represents production of some 67,000 boe/d in 2017. As part of the agreement, Noreco will assume all of Shell’s existing commitments and obligations, including the Tyra redevelopment and the decommissioning costs associated with the assets.
The start-up of the Tyra gas field, located in the Danish North Sea, after redevelopment was approved by the DUC partners in December 2017 and planned for 2022. It will enable a production capacity of 60,000 boe/d, Total said Sept. 25.
Under the agreement with Noreco, Shell Trading and Supply and Shell Energy Europe Ltd. will continue to have oil and gas lifting rights from the SOGU assets for a period after completion.
Additionally, Shell will retain a downstream presence in Denmark following completion of the transaction through A/S Dansk Shell, which includes the Fredericia refinery.
Reuters contributed to this report.