London - Royal Dutch Shell and
its partners Eneco Holdings NV and Mitsubishi are seeking to sell a stake
in two Dutch offshore wind-farm projects that may cost $1.4 billion to develop,
two people familiar with the plan said.
The companies are looking to
reduce their ownership in the Borssele III and IV wind farms by as much as 45
percent, according to the people who asked not to be named because they aren’t
authorized to speak about it publicly. The fourth partner, infrastructure
contractor Van Oord NV, is keeping its share of the project.
The move would allow the
companies to scale back financial exposure to the wind farms and redeploy the
cash in new projects with the potential for higher returns. Shell has said only
that it is trying to draw in additional investors, refusing to detail what that
may entail. Its strategy is to focus on developing the early stages of gigantic
wind farms and avoid holding the assets as long term operations, which offers a
steady but slower payback.
“This is part of a planned
assessment by the consortium on how to best fund the project and future
offshore wind projects for the long term,” Eneco said in a statement Monday,
which Shell said it and the other partners endorsed. “Offshore wind projects
require substantial capital. We are in the energy transition for the
long-haul.”
The project marked Shell’s
first foray into large-scale offshore wind developments. Shell and its partners
won a contract to build the facilities 22 kilometers (14 miles) off the port
city of Zeeland in the Netherlands last December, beating
26 other bidders in a government auction for power-generation capacity.
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With a combined capacity of
700 megawatts, the units may require investment of $1.4 billion by the time
they are complete in 2020, according to estimates from Bloomberg New Energy
Finance. By those calculations, a 45 percent stake may be worth roughly $630
million.
None of the companies have
disclosed their specific stakes in the project or their outlook for the total
investment required. One of the people familiar with the deal said Shell has 50
percent, Eneco 30 percent, and both Van Oord and Mitsubishi each have 10 percent.
The stake may be split and
sold to multiple buyers, the people said. The companies are currently running
the sale process and expect to wrap it up before the end of the year. One new
equity partner has already been selected, according to one of the people.