Shell Offloads Danish Assets in $1.9 Billion Deal

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Royal Dutch Shell's (NYSE:RDS-A) (The Hague, Netherlands) plan to sell off $30 billion in assets has taken a step closer to completion following the sale of its Danish upstream oil and gas assets to Norwegian Energy (Noreco) for $1.9 billion.

The sale will see Noreco take control of wholly owned subsidiary Shell Olie-og Gasudvinding Danmark B.V. (SOGU), subject to regulatory approval, which is expected to be completed in 2019. Noreco will assume all of Shell's existing commitments and obligations, including the Tyra redevelopment and the decommissioning costs associated with the assets. It includes a 36.8% non-operating interest in the Danish Underground Consortium (DUC) which is overseeing the decommissioning and planned redevelopment of the Tyra field, the largest proposed investment in Danish waters. The DUC has assets in 15 offshore fields in four operational hubs: Halfdan, Tyra, Gorm and Dan.

The sale represents production of some 67,000 barrels of oil equivalent (boe/d) (Shell's share in DUC) in 2017, according to Shell. Noreco stated the transaction involves proven and probable (2P) reserves of 209 million boe based on an independent CPR assessment, of which 65% are liquids. Under the agreement, Shell Trading and Supply and Shell Energy Europe Limited will continue to have oil and gas lifting rights from the SOGU assets for a period after completion. Shell will retain a downstream presence in Denmark through A/S Dansk Shell, which includes the Fredericia refinery.

Andy Brown, Shell's upstream director, said: ''Today's announcement is consistent with Shell's strategy to simplify its portfolio through a $30 billion divestment programme, and contributes to our goal of reshaping the company into a world-class investment case." "We are very proud and grateful to have been part of the Danish Underground Consortium since its inception five decades ago,'' added Shell's country chair, Lee Hodder. ''The DUC continues to provide material tax revenues, jobs and energy security to Denmark, and the Tyra redevelopment will ensure that this will be the case for decades to come.''

Halfdan is the largest-producing field in Denmark and the most important DUC asset in terms of value and resources. It started production in 1999 and consists of two main groups of platforms, Halfdan A and Halfdan B in addition to an unmanned wellhead platform, Halfdan CA (North East). The largest project looking ahead is the redevelopment of the Tyra field, which was given the green light in 2017 and is expected to be commissioned in 2022. It has an investment cost of more than $3.25 billion which the partners claimed will extend the life of the field by 25 years. The investment is the largest ever made in the Danish North Sea and, on commissioning, the redeveloped Tyra field will produce 60,000 boe/d.

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