Shell And KUFPEC Cancel Thai Gas Field Deal

Royal Dutch Shell has announced that it has cancelled a deal to sell its stakes in a Thai gas field to KUFPEC – Kuwait Foreign Petroleum Exploration Company. The deal was worth approximately $900 million. The deal was announced at the beginning of the year and was expected to be concluded in this year’s first quarter.

“… the different interpretations of the treatment of share sale transactions were not resolved within Shell and KUFPEC’s agreed timeframe. Therefore, both parties jointly decided to terminate the transaction,” said a Royal Dutch Shell spokesperson in an emailed statement.

Debt reduction

The sale of the gas field stakes by the oil major was intended to reduce debt held by Royal Dutch Shell following its acquisition of BG Group at a price of $70 billion. So far Shell has managed to raise over $25 billion after making various divestments and is expected to meet a target of $30 billion after disposing of other assets by 2018. Some of the divestments it has made include exiting parts of the energy sector in Ireland as well as selling assets in Gabon. Five months ago Shell also sold an aviation subsidiary that was operating in Australia.

Under the deal with the Kuwaiti firm, Royal Dutch Shell was expected to sells its shares in Thai Energy Co Ltd and Shell Integrated Gas Thailand Pte Ltd to KUFPEC’s Thai subsidiary. Both Thai Energy Co Ltd and Shell Integrated Gas Thailand Pte Ltd jointly hold a 22.222% stake in a natural gas field in the Bongkot area of Thailand as well as in offshore fields adjacent to the area. Other firms which have a stake in the Bongkot offshore fields include French firm Total which has a 33.333% and Production PCL and PTT Exploration which jointly have a 44.445% stake.

Bongkot concession

Royal Dutch Shell subsidiary Shell Integrated Gas Thailand Pte Ltd will however continue to support development and operations at Bongkot. The Shell subsidiary will also take part in the licensing round that is slated for the near future in order to extend the Bongkot concession. The expiration of the Bongkot concession will take place in 2023.

The cancellation of the deal with KUFPEC comes days after Shell announced that it was looking to dispose of a stake held in offshore wind farms in the Netherlands. Shell’s partners in the wind farm projects are Mitsubishi and Eneco. Development of the projects is expected to cost approximately $1.4 billion.

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