Royal Dutch Shell Plc. (RDS-A: Quote, RDSA.L, RDSB.L, RDS-B) Tuesday agreed to acquire part of Spanish oil firm Repsol S.A's (REPYY.PK) LNG portfolio outside of North America for a cash consideration of $4.4 billion.
The portfolio being bought from various subsidiaries of Repsol includes supply positions in Peru and Trinidad & Tobago.
The European oil giant will also assume and consolidate balance sheet liabilities mainly reflecting leases for LNG ship charters of currently $1.8 billion. The balance sheet impacts are subject to final assessment before completion of the transaction.
The acquisition will add LNG capacity in the West Atlantic from Atlantic LNG in Trinidad & Tobago, and in the East Pacific from Peru LNG. These additions will complement Shell's existing LNG capacity in Africa, Asia, Australia, the Middle East and Russia.
The acquisition is expected to add about 7.2 million tonnes per annum or mtpa of LNG volumes through long-term off-take agreements, including some 4 mtpa of equity LNG plant capacity.
This equity LNG plant capacity comprises ALNG trains 1-4 14.6 mtpa capacity and Peru LNG 4.45 mtpa capacity, both on a 100 percent basis.
Shell expects to add value to this portfolio by optimizing the new LNG flows in its world-wide customer base. The new portfolio is expected to immediately provide additional cash flow to Shell, and on-going capital expenditure requirements are estimated to be limited.
The transaction, which has an effective date of October 1, 2012, is expected to close in the second half of 2013 or early 2014.
As part of this agreement, Shell has committed to supply around 0.1 mtpa of LNG to Repsol's Canaport LNG terminal in Canada for 10 years.
Shell CEO Peter Voser said, "Shell's world-wide LNG supply position and customer base means we are uniquely positioned to add value to Repsol's LNG portfolio, including through Shell's trading capabilities. By optimising the combined portfolios we will increase our ability to bring LNG to areas that need it the most, adding value for Shell, our partners and our customers."
Repsol's Argentine unit was nationalized last year and the company has been saddled with hefty debt. Repsol said Tuesday that the deal would generate a pretax gain of $3.50 billion and exceeds its commitment divestitures contemplated in the Strategic Plan for the period 2012-2016.
Repsol said the deal would reduce more than half its net debt to 2.20 billion euros. With the proceeds, Repsol will boost organic growth of its Upstream business.
RDSA.L settled down 1.6 percent on Tuesday at 2,138.50 pence.
Repsol closed on Tuesday lower by 2.40 percent at 15.46 euros.
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by RTT Staff Writer
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