Shell head office raises prospect of full exit from NZ

Thursday 10th December 2015

Multi-national oil company Royal Dutch Shell is putting its New Zealand assets up for strategic review as part of a global strategy to become "a simpler, more profitable and resilient company."

While Shell New Zealand chairman Rob Jager was at pains to say there was no decision to sell out of New Zealand, he acknowledged that the Dutch head office had talked in terms of a global divestment programme that could take up to three years.

Shell has operated in New Zealand for more than a century and supplies more than 70 percent of New Zealand's natural gas for industrial and domestic use, owning 83.75 percent of the giant offshore Maui gas field, 48 percent of the offshore Pohokura gas field, and 50 percent of the onshore Kapuni field, all of which it manages in partnerships, including its 50/50 joint venture with Todd Corp, Shell Todd Oil Services.

Shell NZ also has a 60 percent stake in exploration permits for the Great South Basin, a little-explored but highly prospective offshore gas field off the bottom of the South Island and a 33 percent stake in the Caledonia basin, a distant, deep-sea oil and gas prospect. Shell announced earlier this year it was postponing plans to drill exploration wells in the GSB this summer. Shell NZ sold out of its transport fuels distribution business in 2010, with those assets re-emerging as NZX listed Z Energy in 2013.

Royal Dutch Shell has said it will seek a more focused portfolio of opportunities in "deep water and integrated gas" assets.

"Options range from business as usual to potentially full country exit and any alternatives in between," said Jager, who has worked for Shell for 38 years. "This is not an easy announcement to make. It (Shell) is part of who I am."

The previously announced sale of its interest in the Maui gas pipeline was not part of the review process and decisions on its GSB exploration programme would continue on a business as usual basis while the review, to be undertaken by a small team of offshore Shell employees and external advisers, took place. It is expected to take "months rather than weeks," Jager said.

He declined to comment on whether Shell NZ has participated in the government's annual Block Offer for exploration territory, the results of which are expected to be announced next week.

The review would be "complex, and difficult to predict the outcome and timing," said Jager, who "committed to completing the review in a timely manner."

BusinessDesk.co.nz

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