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Shell under pressure to sell assets

Last updated 10:22 15/01/2014

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Royal Dutch Shell could look to sell US$15 billion ($18 billion) worth of assets over the next two years including some North Sea fields, said a media report on Tuesday, expanding on its existing guidance that divestments would accelerate this year.

Shell, whose new chief executive Ben van Beurden took over two weeks ago, will sell some of its North Sea oil fields as well as parts of its refining portfolio and some early-stage projects, reported the Financial Times, citing a person close to the company.

The oil company, the world's number three among investor-controlled energy firms, declined to comment on the report.

Shell and its peers in the industry are facing increasing investor pressure to hold down spending as costs rise and prospects for oil prices wane.

The Anglo-Dutch company said in October that it would step up divestments "significantly" in 2014 and 2015 to keep cash flowing in, after forecasting that 2013 capital expenditure would peak at about US$45b.

Analysts and bankers say that some of the company's Nigerian oil blocks plus Shell's 23.1 per cent stake in Australian group Woodside Petroleum - worth over US$6b at current prices - could be put on the block.

"It wouldn't surprise me if Shell were to sell some North Sea assets," Santander analyst Jason Kenney said.

"In the North Sea, something like 80 per cent of its production comes from 20 per cent of its asset base so there's a long tail of smaller positions."

Since Van Beurden began working alongside outgoing boss Peter Voser at the beginning of the fourth quarter, the company has cancelled plans to build a gas-to-liquids (GTL) plant in the United States, raising investor hopes of a tighter spending regime.

Kenney said he expected Shell under Van Beurden to focus on capital discipline, better returns and selling peripheral assets.

Van Beurden will face investors on January 30 as the company reports fourth-quarter results, and on March 13 at a planned investor day.

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- Reuters

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