Shell agrees to sell Upstream interests in Denmark to Noreco for $1.9 billion
Oct 17, 2018
Royal Dutch Shell plc (Shell), through its affiliate Shell Overseas Holdings Limited, has reached an agreement with publicly listed Norwegian Energy Company ASA (Noreco), to sell its shares in Shell Olie-og Gasudvinding Danmark B.V. (SOGU) for a consideration amount of $1.9 billion. SOGU is a wholly-owned Shell subsidiary that holds a 36.8% non-operating interest in the Danish Underground Consortium (DUC).
The sale is subject to regulatory approval and expected to be completed in 2019. The transaction’s effective date is 1 January 2017.
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 programme, and contributes to our goal of reshaping the company into a world class investment case.’’
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 sale represents production of some 67,000 boe/d (Shell share) in 2017. Under the agreement, Shell Trading and Supply and Shell Energy Europe Limited will continue to have oil and gas lifting rights from the SOGU assets for a period after completion.
The transaction is a share sale which means that, upon completion, local SOGU staff primarily dedicated to DUC will continue to be employed by their current entity, which will be owned by Noreco at completion.
“We are very proud and grateful to have been part of the Danish Underground Consortium since its inception five decades ago’’ said Shell’s Country Chair, Lee Hodder. ‘’The DUC continues to provide material tax revenues, jobs and energy security to Denmark, and the Tyra redevelopment will ensure that this will be the case for decades to come. I would like to pay tribute to the staff, stakeholders, partners and authorities who have contributed.’’
This transaction has no direct impact on Shell’s other businesses in Denmark. Following completion, Shell will retain a Downstream presence in Denmark through A/S Dansk Shell, which includes the Fredericia refinery. The network of Shell-branded retail stations in Denmark continues to be operated by DCC. Shell will continue to evaluate options to grow new business in Denmark if relevant opportunities present themselves.
Notes to Editors:
- The transaction is an agreement by Shell Overseas Holdings Limited with Altinex AS, a subsidiary of the Norwegian Energy Company ASA (Noreco).
- The transaction includes a 100% interest in Shell Olie-Og Gasudvinding Denmark Pipelines ApS (“SOGUP”) held by SOGU. SOGUP owns a proportionate interest in the Tyra West – F3 gas pipeline.
- The transaction includes mechanisms to adjust the consideration for actual over-or underproduction above or below certain thresholds.
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