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Shell to sell Permian assets to ConocoPhillips

September 27/2021

MOSCOW (MRC) -- Royal Dutch Shell has agreed to sell its business in the Permian Basin, the biggest oilfield in the US, to rival ConocoPhillips for USD9.5bn in cash, reported Financial Times.

The Anglo-Dutch oil supermajor had pointed to the Permian as one of its core oil and gas-producing regions as recently as this year. But it is under intense pressure to accelerate a shift out of fossil fuels.

In May, a district court in the Netherlands ordered the company to slash its net carbon pollution by 45% compared with 2019 levels by 2030, prompting chief executive Ben van Beurden to say that Shell would hasten plans to reduce emissions.

Shell said last Monday that the deal would include roughly 225,000 net acres of land that produce 175,000 barrels of oil equivalent a day. Houston-based ConocoPhillips said it expected to produce about 200,000 b/d from the properties by next year.

Shell said it would use SD7bn of cash from the transaction to fund additional shareholder distributions after closing and the remainder to pay down debt. Analysts at RBC Capital Markets expected the sale would fund additional share buybacks. Shells shares rose more than 1.5% in after-hours trading last Monday.

The deal highlights the widening gap between Europe-based oil companies such as Shell, BP and TotalEnergies, which are attempting to pivot towards renewable energy and low-carbon electricity, and US peers that continue to bet on the future of oil and gas.

The US shale oil and gas industry, bedevilled for years by steep financial losses, is undergoing a period of rapid consolidation that has fuelled tens of billions of dollars in deals over the past year and a half.

Shell said that producing oil and gas would continue to play a critical role in its strategy providing the energy the world needs today whilst funding shareholder distributions as well as the energy transition.

Shells sale had been expected for several months, with a number of major shale producers having considered buying the assets. Some bankers had said that the company might struggle to find a buyer because Shell does not operate about half of the wells it owns, meaning other companies - foremost Occidental Petroleum - make operational decisions.

As MRC informed earlier, Royal Dutch Shell plans to reduce its refining and chemicals portfolio by more than half, it said in July 2020 without giving a precise timeframe. The move is part of the Anglo-Dutch company's plan to shrink its oil and gas business and expand its renewables and power division to reduce greenhouse gas emissions sharply by 2050.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
Author:Margaret Volkova
Tags:crude and gaz condensate, gas processing, BP Plc, ConocoPhillips, OxyChem, Shell, Total Petrochemicals, USA.
Category:General News
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