Royal Dutch Shell has entered an agreement with Cosan Limited, an energy conglomerate in Brazil, to sell its stake in Comgas. Cosan already has a 63.1% stake in Comgas. The deal will see Royal Dutch Shell dispose of its 16.8% interests in the largest natural gas distributor in Brazil by selling its 21.8 million shares in Comgas. Shell will get approximately $380 million after selling the stake. The deal could be concluded before the year ends if the closing conditions are met.
“This transaction allows us to focus our efforts in Brazil on areas where we see the most strategic value for Shell longer-term. Brazil is an important country to Shell, and our portfolio of high quality assets and development opportunities positions us well for the future,” said the director of Integrated Gas and New Energies at Royal Dutch Shell, Maarten Wetselaar.
Downstream and upstream businesses
Besides a deepwater portfolio Royal Dutch Shell also has downstream businesses in Brazil. The Anglo-Dutch oil giant also has minority stakes in Iara, Lapa, Sapinhoa, Lula and Libra fields. These fields are all located in the Santos Basin. In Brazil Royal Dutch Shell operates its business via Shell Brazil Holding B.V, Integral Investments B.V. and Shell Gas B.V. Cosan Limited on the other hand operates its businesses via Cosan Corporate, Moove, Comgas, Raizen Combustiveis and Raizen Energia.
Recently amendments were made to the oil sector laws in South America’s largest economy and this has increase the viability of investments in the country’s oil industry. Royal Dutch Shell has also been making enhancements in its upstream portfolio and in the course of the coming three years intends to acquire deep-water vessels that are more standardized.
The oil major is also contemplating disposing of a 17% stake it holds in Oman’s Mukhaizna oil field. Occidental Petroleum Corporation operates the field which has a daily production rate of 127,000 barrels per day. Once it sells this stake Royal Dutch Shell expected to pocket approximately $200 million.
These divestment moves are part of the oil giant’s strategy to lower its debt which came about after it acquired BG Group at a price of $50 billion. Between 2016 and 2018 the oil major expects to have netted $30 billion from the portfolio optimization strategy. So far Shell is on track to close divestment deals worth $25 billion which means that the target will be met by next year.