Oil giant Shell is to start a sale of up to $30bn (N4.78 trillion) of assets next year after weak refining margins and oil theft in Nigeria caused a sharp fall in profits, a report has claimed.
The report in the UK Telegraph says that assets to be sold off include oil assets in the Niger Delta worth $2bn (N318.87 billion).
Last month, Peter Voser, Shell’s chief executive, said: “We are entering into a divestment phase like we had a few years ago.”
According to Fred Lucas, of JP Morgan Cazenove, Shell’s guidance for capital spending implies at least $15bn in asset sales during the next two years. “Yet without too much thought to portfolio stress, we can isolate almost double that figure of potentially non-core assets in Shell’s global portfolio,” he added.
The disposal plan could be unveiled as early as January 2014, and would be the largest in the Anglo-Dutch oil group’s history, representing 17 per cent of thecompany’s $178bn net assets.
“We are facing headwinds from weak industry refining margins, and the security situation in Nigeria, which continue to erode the near-term outlook,” said Mr Voser when he reported in October that third-quarter pre-tax profits had slumped by 31pc to £2.56bn. Results took a $300m hit due to the “deteriorating security situation” in Nigeria and a blockade there.
Third-quarter pre-tax profits slumped by 31pc to £2.56bn. Results took a $300m hit due to the “deteriorating security situation” in Nigeria
But Shell has also come under pressure from investors this year, as capital investment increased while the shares underperformed. The shares fell the most in two years on October 31 when Shell said net spending had risen this year because of acquisitions and higher costs at projects. Mr Voser said that the five-year $130bn investment plan will peak this year.
Mr Voser is to step down at the end of the year and will be succeeded in January by Shell’s Dutch refining and marketing chief, Ben van Beurden.
Shell’s Chief Financial Officer, Simon Henry, said Shell would be investing in projects from Brazil to China and plans to sell production assets in Nigeria, the United States, and possibly some other regions, along with interests in refineries and retail.
Shell said more clarity on the asset disposals would be given in full-year results on January 30.