Shell puts Ormen Lange upgrade on hold

The Anglo-Dutch oil giant Royal Dutch Shell has postponed plans to install subsea gas compression on Norway's Ormen Lange field, one of Europe's largest, arguing soaring costs had undermined the economics.

Shell puts Ormen Lange upgrade on hold
An onshore gas liquefaction plant takes gas from Ormen Lange. Photo: Bilfinger Industrial Solutions
"The oil and gas industry has a cost challenge," the company said. "This, in combination with the maturity and complexity of the concepts and the production volume uncertainty, makes the project no longer economically feasible."
Norwegian oil services firm Aker Solutions had designed the project. 

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Repsol closes Shell gas deal to ease debt

Spanish energy group Repsol said on Tuesday it had sold its liquefied natural gas (LNG) assets to Shell for €5.1 billion ($6.65 billion) in cash and debt.

Repsol closes Shell gas deal to ease debt
Repsol President Antonio Brufau (left) with Shell CEO Peter Voser after signing their agreement in Madrid on February 26, 2013. Photo:HO/REPSOL/AFP

"The agreement, which generates approximately $3.5 billion (€2.7 billion) pre-tax capital gain for Repsol, includes the assets in Trinidad & Tobago (Atlantic LNG), Peru LNG and Bahia de Bizkaia Electricidad (BBE) as well as the LNG sale contracts and time charters," the company said in a statement.

Repsol said it is keeping its LNG assets in Canada, and had signed a supply agreement with Shell, as the current low gas prices in North America would not allow it to earn a return on the Canaport regasification terminal.

The Madrid-based oil giant said the transaction, which it expects to sign off on before the end of the year, will mean that it surpasses the €4.5 billion in divestments outlined in the 2012–2016 strategic plan.

"The deal strengthens the company's balance sheet and financial position, advancing the goal of reinforcing its credit ratings, and reduces Repsol's net debt by more than half to €2.2 billion, excluding Gas Natural Fenosa," added the company.

It said the funds obtained from the deal will allow it to boost its upstream organic growth strategy and build upon its exploratory successes.