Statoil Exits Shah Deniz Gas Project With Stake Sale To Petronas

In Oil Price War, Saudi's Biggest Rival Is Next Door
Statoil sells 15.5% stake in the Shah Deniz project in Azerbaijan to Petronas for $2.25 billion.

Reuters

OSLO, Oct 13 (Reuters) - Statoil exited Azerbaijan's Shah Deniz gas project on Monday, selling a 15.5-percent stake to Malaysia's Petronas for $2.25 billion as part of asset sales to shore up returns to shareholders.

Like other oil majors, Norway's Statoil has been selling assets amid rising costs and falling oil prices. It earlier sold a 10 percent stake in Shah Deniz.

French oil major Total sold out of Shah Deniz in May saying it would focus on operating projects rather than holding minority stakes.

Monday's deal also includes Statoil's stakes in a South Caucasus pipeline company and two other firms.

"The divestment optimises our portfolio and strengthens our financial flexibility to prioritise industrial development and high-value growth," Lars Christian Bacher, Statoil's head of development and production activities outside Norway, said in a statement.

Teodor Sveen Nilsen, an analyst at Swedbank who holds a "buy" recommendation on the stock, said the sale was a positive move.

"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," Nilsen said in a note to clients.

The Shah Deniz field is operated by BP with partners TPAO of Turkey, Azerbaijan's SOCAR, Russian oil firm Lukoil and Iran's Nico (Naftiran Intertrade Co).

Statoil said its second-quarter production from the Shah Deniz field was 38,000 barrels oil equivalent per day.

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 metres.


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