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Shell weighs sale of $2 billion-plus stake in Queensland LNG facilities

6/3/2020

Royal Dutch Shell is considering raising more than $2 billion from the sale of a stake in the common facilities at its Queensland Curtis LNG plant in Australia, according to a sale flyer reviewed by Reuters.

“Royal Dutch Shell plc is considering a sale of a 26.25% interest in the Queensland Curtis LNG (QCLNG) Common Facilities - a multibillion dollar investment opportunity,” the sale flyer said.

The sale process is being run by Rothschild & Co and is due to be completed in 2020, the document showed.

Shell declined to comment on what it called market speculation. Rothschild also declined to comment.

The facilities in which it might sell a stake could fetch between $2 billion and $3 billion, two people familiar with the sale process said.

Flyers on a possible sale went out after infrastructure investors approached Shell expressing interest in the assets, said one of the people familiar with the process.

The QCLNG plant is majority owned by Shell, with minority stakes owned by China National Offshore Oil Corp and Tokyo Gas Co.

The plant has so-called common facilities which Shell wholly owns, including two LNG storage tanks, water, fuel and power generation systems, a tanker-loading jetty and terminals.

The Shell facilities are being offered to infrastructure investors as they offer a U.S-dollar denominated, inflation-linked usage fee from CNOOC and Tokyo Gas over about 15 years, regardless of the plant’s throughput.

Shell acquired its stake in QCLNG and the facilities with its $53 billion takeover of BG Group in 2016.

Shell cut its dividend in April for the first time since World War Two to save cash amid a historic oil demand slump. It aims to sell more than $10 billion of assets in 2019-2020 depending on market conditions.

The potential sale follows Shell’s sanctioning last month of a gas project in Queensland and its renewable energy push in Australia after the takeover of ERM Power last year.

Reporting by Sonali Paul in Melbourne and Paulina Duran in Sydney; Additional reporting by Ron Bousso in London; Editing by Louise Heavens and Christian Schmollinger