Bloomberg News

Shell CEO Sees No Urgency to Sell $6 Billion Woodside Stake

June 05, 2012

Royal Dutch Shell (RDSA) Plc, Europe’s largest oil company, sees no urgency over what to do with its $6 billion stake in Australia’s Woodside Petroleum Ltd. (WPL), Chief Executive Officer Peter Voser said today.

“We are under no urgency or pressure to do anything,” Voser told reporters today in Kuala Lumpur, where he’s attending an industry conference. “Woodside has an interesting growth model in terms of projects and has strategic value.”

Woodside, Australia’s second-largest oil and gas producer, has slumped in Sydney trading since The Hague-based Shell sold 10 percent of the company at A$42.23 a share in November 2010. Shell still owns 23 percent of the Perth-based company, valued at A$6.1 billion ($6 billion) today. Woodside rose 4 percent today to A$32.10 at 2:24 p.m. in Sydney.

Shell’s Chief Financial Officer Simon Henry said in February the stake didn’t fit in with Shell’s long-term plans. Woodside CEO Peter Coleman said in an interview last month he has talked with companies interested in buying the shares and has offered to help Shell with a sale.

Separately, Voser said the company is working toward a final investment decision on the proposed Arrow liquefied natural gas project in Australia. Arrow Energy Ltd., owned by Shell and PetroChina Co. (857), expects to decide late next year whether to go ahead with the venture on Curtis Island in Queensland state, CEO Andrew Faulkner said last year.

Shale Gas

“It’s making progress,” Voser said today. “Given the overall costs in Australia we will aim to develop this project in a paced way, and that means a slightly later development.”

Shell’s CEO also said the company sees potential to expand in so-called unconventional gas in North America, Latin America, Australia, China and potentially Ukraine.

“That’s where you will see Shell operating in the near-and medium-term future,” he said.

China, estimated to hold triple the shale gas reserves of the U.S., has yet to produce the fuel commercially because its drillers lack technology and face tougher geology. The Asian nation is seeking to emulate the U.S., where a shale boom made it the world’s biggest gas producer.

Shell signed the first production-sharing contract to explore, develop and produce shale gas in China in March and said it’s making progress.

“It is geologically more complex, but I think we can achieve similar cost optimization and progress like we have done in North America,” Voser said. “We think we can make this a profitable proposition and that’s what we’re seeing with the encouraging results so far.”

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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