Oil major Royal Dutch Shell has disclosed plans to offload a 90% interest in a gas project located in Gaza. Palestine Investment Fund will acquire Shell’s stake as the oil giant progresses with the $30 billion divestment target. Financial details regarding the transaction were not disclosed.
Shell’s stake in the Gaza gas project came through its buyout of BG Group as the latter discovered the field in 2000. However BG Group did not make any progress on the field due to commercial and political concerns. An international partner is now being sought by Palestine Investment Fund with a view to taking over a 45% stake in the project.
It will also be the responsibility of the international partner to design a development plan for the field in conjunction with the operator. It is hoped that the development will meet the needs of Palestine’s gas-fired electricity plants as well as aid Palestine in becoming an exporter of energy.
By selling the stake the divestment program of the Anglo-Dutch giant is progressing well and will assist significantly in reducing the debt that was incurred after acquiring BG Group at a price of $47 billion. Not only is the divestment expected to cut company costs but it will also enhance return to capital as well as cash flow. Additionally the divestment will assist Shell in upgrading and streamlining its portfolio.
Currently Shell is wrapping up divestment deals that are worth over $23 billion and is therefore on track to meet its goals by the end of this year. The Anglo-Dutch giant also recently announced that it was disposing assets worth approximately $2 billion. Royal Dutch Shell is also engaged in discussions over other prospective transactions which would net an extra $5 billion and the talks are in advanced stages.
This comes in the wake of a report by a news organization based in the Netherlands that Shell possessed a deep understanding of both the science as well as the risks posed by fossil fuel emissions. According to the report Shell knew as early as the 1980s that unnatural climate change was being caused by greenhouse gases.
“The potential implications for the world are, however, so large that policy options need to be considered much earlier. And the energy industry needs to consider how it should play its part,” researchers at Shell wrotein a report that was released in 1988 but which was based on studies that had been concluded two years earlier.