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Shell to exit New Zealand in $578M deal

OMV, an international integrated oil and gas company based in Vienna, will buy Shell's interests in its upstream New Zealand entities. The deal is likely to close by the fourth quarter of 2018.
Credit: ALFREDO ESTRELLA
View at a Shell petrol station on September 6, 2017, in the Tlanepantla municipality, suburbian Mexico City. (ALFREDO ESTRELLA/AFP/Getty Images)

The Netherlands-based Royal Dutch Shell PLC (NYSE: RDS-A, RDS-B), which has its U.S. arm in Houston, announced March 15 that it’s exiting New Zealand in a $578 million deal.

OMV, an international integrated oil and gas company based in Vienna, will buy Shell’s interests in its upstream New Zealand entities. The deal is likely to close by the fourth quarter of 2018.

The Financial Times reports that Shell has been operating in New Zealand for more than a century.

The deal is the result of a two-year strategic review of Shell’s interests in New Zealand and comes after Shell completed the sale of its share in the Kapuni onshore gas field to Todd Energy in New Zealand last August.

OMV will buy eight Shell entities, and the deal includes interests in Māui, Pohokura and the Tank Farms, per Shell’s press release. OMV already is a partner in the Maui and Pohokura joint ventures and plans to assume operatorship in both joint ventures, per OMV’s press release.

Shell also is selling its 60.98 percent interest in and operatorship of the Great South Basin venture to OMV in a separate transaction. The GSB transfer is effective immediately and increased OMV’s stake to 82.93 percent, per OMV’s release.

Employees of Shell Taranaki Ltd. and Shell New Zealand will become part of OMV New Zealand once the deal is complete.

Exiting New Zealand is part of Shell’s goal to sell $30 billion of assets by the end of 2018 and its efforts to simplify its upstream portfolio, per the company's release.

Shell has been eyeing that $30 billion figure since it announced plans in 2015 to acquire London-based BG Group PLC. Last year, the company reached a deal to sell its upstream business in Ireland for up to $1.23 billion. In 2016, Shell announced deals to sell non-core oil and gas properties in Canada for nearly $1.04 billion and Gulf of Mexico assets for $425 million. The company also sold its Gabon onshore interests for $587 million in March 2017.

Read more about Shell's exit from New Zealand here.

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