Nov. 24 (Bloomberg) -- RWE AG, Germany’s second-largest utility, has opted to sell Egyptian energy assets following a review of Dea, its oil-and-gas exploration unit, according to people familiar with the situation.
The Egyptian assets, which may fetch up to $3 billion, could interest strategic buyers, the people said, declining to be identified because the process is private. RWE is likely to sell assets that still need to be developed, two of the people said. The German utility hired Deutsche Bank AG earlier this year to weigh options for Dea that included the disposal of the unit or certain fields.
RWE is raising as much as 11 billion euros ($14.7 billion) to reduce debt and help finance energy projects as its home country cuts its reliance on nuclear power. The company, which posted a quarterly loss and slashed full-year profit targets three months ago, also may divest its Czech NET4GAS gas-grid unit and its stake in Berlinwasser Holding AG.
RWE Dea had planned to commit $3.6 billion to develop gas fields in the Mediterranean off Egypt’s Nile Delta, a sum that would have been the company’s biggest single investment in oil and gas production, according to its 2010 annual report.
The company has been operating in Egypt since 1974 and has pumped more than 550 million barrels of crude oil from the country, according to its website. Today, RWE Dea holds interests in 14 licenses onshore and offshore in Egypt, covering a net acreage of 14,550 square kilometers.
A spokesman for RWE declined to comment.
The RWE Dea division, which posted 1.5 billion euros in revenue last year, has stakes in projects in Norway, Denmark and Germany, as well as North African countries, and owns licenses to explore for oil and gas in southern Poland.
The German government’s decision to close the country’s nuclear power plants by 2022 was a “substantial” risk to RWE’s earning power, the company said in its interim report. Germany decided to make utilities pull out of atomic energy after Japan’s disaster in March.
--With assistance from Eduard Gismatullin in London. Editors: Chris V. Nicholson, Will Kennedy
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