Statoil exits Shah Deniz with $2.25 bln sale to Petronas

OSLO - Reuters

Oil derricks are silhouetted against the rising sun in an oilfield in Baku. REUTERS Photo

Norway’s Statoil has sold its remaining 15.5 percent stake in the Shah Deniz gas project in Azerbaijan to Malaysia’s Petronas for $2.25 billion as part of asset sales to shore up returns to shareholders.

Like other oil majors, Statoil has been selling assets to protect margins eaten up by rising costs and, in recent weeks, falling oil prices. It earlier sold a 10 percent stake in Shah Deniz.

Monday’s deal also includes Statoil’s stakes in a South Caucasus pipeline company and two other firms.
Its second-quarter production from the Shah Deniz field was 38,000 barrels oil equivalent per day, Statoil said.

“The divestment optimizes our portfolio and strengthens our financial flexibility to prioritize industrial development and high-value growth,” Lars Christian Bacher, Statoil’s head of development and production activities outside Norway, said in a statement.

“The Shah Deniz divestment is yet another sign of credible strategy, (and is) positive,” said Teodor Sveen Nilsen, an analyst at Swedbank who holds a “buy” recommendation on the stock.

“This is yet another sign of Statoil’s priority of value over volume, focus on ROACE (return on average capital employed), cash flow and dividend capacity.”

The Shah Deniz field is operated by BP. The other partners are TPAO, SOCAR, Lukoil and Nico.

The European Union sees the venture as a means of reducing EU reliance on energy imports from Russia. It is expected to supply 20 percent of the EU’s needs in the long-term from proven gas reserves estimated at 1.2 trillion cubic meters.

Statoil will retain an 8.56 percent stake in the ACG field in Azerbaijan which is operated by BP and a 20 percent stake in the Trans Adriatic Pipeline (TAP), which will transport Azeri gas to European markets.

Statoil declined to comment on how much profit, if any, it would make from the sale to Petronas, which will require approval from authorities.

Swedbank’s Nilsen said he believed the firm would book an accounting gain. “We estimate $1.5 billion, or 0.47 crowns per share,” he wrote in a note to clients.

The transaction is expected to close in early 2015, although for accounting purposes the effective date will be set at Jan. 1 2014.