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Shell’s UK boss says it will strike ‘innovative deals’ for its North Sea assets

Paul Goodfellow, Shell upstream director
Paul Goodfellow, Shell upstream director

Oil giant Shell is running the rule over the potential sale of north Sea assets – but it is too early since its mega-merger with rival BG Group to have decided on a sale process.

But Paul Goodfellow, Shell’s upstream vice-president for the UK and Ireland, said the company may be looking at “innovative deals” like the sale of its Anasuria field.

Last year, Shell and its joint venture partner ExxonMobil struck a deal to sell its Anasuria cluster in the Central North Sea to a duo of Malaysia-based oil companies, Hibiscus Petroleum and Ping Petroleum, for close to £70million.

The firm is planning to sell as much as £21billion worth of assets across its global portfolio over the next two years, with Shell chief executive Ben van Beurden signalling it could sell some of its older, lower grade North Sea assets to improve the quality of its portfolio.

In a presentation in Aberdeen yesterday, Mr Goodfellow confirmed that company’s North Sea upstream business includes 33 platforms, 65 different stakes in North Sea fields, and three gas plants.

Since the £37billion takeover of BG, the company’s North Sea ownership covers a wide range. This includes the “iconic” Brent field – which Mr Goodfellow said has “delivered over $20billion of tax to the UK government, created thousands and thousands of jobs and produced millions and millions of barrels of oil” to Jackdaw. This project, part of BG’s assets, is considered to be one of largest undeveloped gas/condensate finds in the UK North Sea, but had been put on hold as the effects of the oil price crash took effect.

Mr Goodfellow said: “We are very early on in terms of the combination with BG.
“It is too early make any comment around the portfolio.
“A company like Shell is always looking at optimising the portfolio in any particular basin as well as at a global level
“As Ben announced at the time, clearly as part of this $30billion (£21billion) group wide divestment programme between of 2016-18, the North Sea will be looked at as well as many other parts of Shells portfolio.”

He added that the company has made “great strides” in reducing North Sea costs that has made its operations “more competitive”. He said operating costs have been driven down 30%, while production efficiency has risen 6%.

As part of this the company has cut at least 750 jobs from its 4,500-strong North Sea workforce.
Mr Goodfellow said: “It is very disappointing to watch colleagues go
“But we are talking about maximising economic recovery for the future, so it is incumbent on myself and shell that we balance the short term with the mid to long term.”

He said the deal to sell the Anasuria cluster was “quite innovative”.
“I can’t go into the details of that. But it did very much fall into this collaborative space we are talking about in terms of what are the barriers to overcome and how can we find ways through that. With Anasuria we managed to do that.

“Do I think the market is an easy market at the moment? Clearly not. “But that doesn’t mean that there aren’t structures and innovative solutions out there.”

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