Shell Markets Egyptian Onshore

Anglo-Dutch major Shell Egypt is to market its current onshore upstream assets in the Western Desert in order to fully concentrate on growing its Egyptian offshore exploration and integrated gas business, it said October 20. The assets predated its acquisition of BG, whose assets were offshore. Shell did not provide a valuation of the assets, but consultancy Wood Mackenzie said it valued them at $775mn, mainly amongst the Badr El Din and North Alam El Shawish developments.

Shell’s portfolio has five key areas, with an average production of about 110,000 barrels of oil equivalent/day in 2019. A drilling campaign is underway, but is only expected to mitigate decline on mature fields, WoodMac said. “However, the assets retain upside and have good access to infrastructure, which could interest companies with brownfield expertise.”

Shell said it remained committed to Egypt and would supporting the government’s energy hub vision by growing positions across the offshore and LNG value chain. "This is where we can best leverage our expertise, deliver the strongest added value to Egypt, and optimise our portfolio to ensure the company delivers a world class investment case."

Khaled Kacem, Shell Egypt Country Chair, said: “Shell companies are progressing with new offshore activities, including our West Delta Deep Marine (WDDM) Phase 9B project, which involves eight new development wells, and exploration in WDDM, for which a 2nd offshore rig has been recently mobilized, that will be followed up with exploration in Rosetta as well as the recently awarded Blocks 4 and 6”

Shell said it would look for "a capable buyer that will bring new investment and growth into the Western Desert and build on our successful partnership with the Egyptian General Petroleum Corporation. Any sale is contingent on finding an appropriate buyer, commercial negotiations and required approvals. We anticipate the start of active engagement with potential buyers in Q4 2019. During the divestment process we remain committed to ensure continued safe and reliable operations, and will keep our stakeholders regularly informed.”

Shell’s integrated portfolio includes onshore (Western Desert) and offshore (Mediterranean) upstream operations, LNG, through our Egyptian LNG (ELNG) joint-venture, and the lubricants business through Shell Lubricants Egypt (SLE).

There are a number of players active onshore with the know-how and financial clout to take on some or all of the assets, including BP and Wintershall DEA.