Shell has signed an agreement with a consortium to sell its upstream assets in Egypt; specifically, those in the Western Desert, for a base consideration of $646 million U.S. dollars, the company announced this Tuesday.
Firstly, the agreement involves Shell Egypt and the consortium made up of subsidiaries of Cheiron Petroleum and Cairn Energy PLC. After the base consideration, the agreement contemplates further payments of $280 million between 2021 and 2024.
Secondly, those payments will be contingent to the oil price and further results on exploration. Although the transaction is still subject to regulatory approvals, it might be completed by the second half of this year.
Thirdly, the assets considered in the agreement are in fact a full package consisting of Shell Egypt’s interest in 13 onshore concessions, as well as the company’s share in Badr El-Din Petroleum Company (BAPETCO).
Moreover, Shell Egypt is whole owned by the Royal Dutch Shell. The company in fact has had a presence in Egypt for over a 100 years. After the transaction it will still remain as a leading player in the country, with an integrated portfolio in the upstream, midstream and downstream sectors.
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Shell’s upstream assets operated with Chevron
In addition, this portfolio includes exploration, upstream operations, LNG through Shell’s Egyptian LNG company, which is a joint venture; as well as a lubricant business with Shell Lubricants Egypt.
“Today’s announcement is consistent with Shell’s efforts to shift our Upstream portfolio to one that is more focused, resilient and competitive,” said Wael Sawan, Shell’s Upstream Director.
He also noted: “the deal will deliver value to Shell and to Egypt. It will enable Shell to concentrate on its offshore exploration and integrated value chain in Egypt, including seven new blocks in the Nile Delta, West Mediterranean and Red Sea.”
“It will also help Egypt to maximize the potential of its onshore assets through new investment; helping secure energy and revenue for years to come,” he concluded.
Finally, some of the assets included in the transaction operate in the Herodotus Basin; shell is the operator through its subsidiary BG Delta Limited, with Chevron as a partner, through Noble Energy and Noble Energy Egypt. Company that Chevron recently bought.
