Editorial: Shell's great rabbit hunter?
"Whenever you see a successful business, someone once made a courageous decision." Peter F. Drucker (1909-2005)
"If you chase two rabbits, both will escape" – Chinese Proverb
News reaches us of supermajor Shell’s $1.14 billion divestment of its eight per cent interest in the Wheatstone liquefied natural gas (LNG) project in Western Australia. The sale comes after a warning from new Shell CEO, Bert van Beurden, that full-year profits would be "significantly lower" than expected and that more " hard choices" would have to be made " to improve Shell's capital efficiency".
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Van Beurden will announce his divestment and reinvestment strategy in the coming months, with rumours of a $30 billion asset clearance from the organisation’s global portfolio.
Amongst those assets destined for the chop are $1.8 billion of licenses in the troubled Africa Niger Delta where Shell declared force majeure on oil exports in 2013, and up to $5 billion of shale oil and gas assets in the US that do not figure in the company’s long-term plans.
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Van Beurden’s disposal of key elements of the Shell natural gas portfolio, comes at the same time as ExxonMobil’s Senior Vice President, Andrew P Swiger, affirmed his company’s position that natural gas will be the world's fastest growing major energy source with global demand up by 65 per cent through 2040.
After his predecessors bought heavily into the LNG story and spearheaded the move towards floating LNG in the form of the upcoming $12.6 billion Prelude megaproject, Van Beurden’s hard choices may leave a bitter taste for some, especially with the M&A market at its lowest level since 2008.
Still, always better to chase one rabbit courageously... Have your say below
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