Toronto - Royal Dutch Shell will sell almost all its production assets in Canada’s oil sands in a $7.25 billion (R96 billion) deal that cuts debt and reduces involvement in one of the most environmentally damaging forms of fossil-fuel extraction.
The company will sell all of its oil-sands interests apart from a 10percent stake in the Athabasca Oil Sands mining project, The Hague-based Shell said yesterday. It will also continue as operator of the Scotford upgrader and Quest carbon capture and storage project.
The Anglo-Dutch producer is part-way through a $30 billion divestment programme to reduce debt, which soared following its $54 billion acquisition of BG Group last year. The company sold $5 billion of assets last year, and this week clinched $2.2 billion from the breakup of a refining partnership with Saudi Arabian Oil. Chief executive officer Ben van Beurden said last month that Shell was unlikely to take on new high-cost oil-sands projects after the crude price slump.
“This announcement is a significant step in reshaping Shell’s portfolio,” Van Beurden said. “The proceeds will accelerate free cash flow and reduce gearing and make a meaningful contribution to Shell’s $30 billion divestment programme.”
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The company will sell to a unit of Canadian Natural Resources its entire 60 percent interest in the Athabasca project, all of the Peace River Complex in situ assets, which extract crude without mining, and a number of undeveloped leases in Alberta. Those disposals will fetch about $8.5 billion, comprising cash and shares.
Under a second agreement, Shell and Canadian Natural will jointly acquire Marathon Oil Canada, which holds a 20 percent interest in the Athabasca project, from an affiliate of Marathon Oil for $1.25 billion each, to be settled in cash. The transactions are expected to close in the middle of this year, subject to regulatory approvals. Oil sands, the reserves of heavy crude found primarily in northern Alberta, are expensive to extract and have fallen out of favour following the market collapse.