Shell CEO warns Brexit could slow US$30 billion asset sale plan

Royal Dutch Shell's chief executive Ben van Beurden speaks at Shell's Capital Markets Day media presentation in London, on June 7, 2016.
Royal Dutch Shell's chief executive Ben van Beurden speaks at Shell's Capital Markets Day media presentation in London, on June 7, 2016.PHOTO: AFP

LONDON (REUTERS) - Royal Dutch Shell's chief executive, Ben van Beurden, has told investors that Britain's decision to exit the European Union could slow its US$30 billion (S$40.4 billion) asset sale plan, especially in the North Sea which had struggled to attract buyers for years.

The comment, made during an investor and analyst event at the Wimbledon tennis tournament this week, came as Shell mandated Bank of America Merrill Lynch to find buyers for several key assets in the North Sea, including its stake in the lucrative Buzzard oilfield, hoping the sale would raise at least US$2 billion.

The Anglo-Dutch oil major had previously targeted wrapping up the disposal of dozens of assets around the world by roughly 2018 to help fund its US$54 billion acquisition of rival BG, which it completed in February.

Chief Financial Officer Simon Henry had previously indicated the divestment programme could take longer than the initial time frame.

But Mr van Beurden said on Wednesday the uncertainty that has engulfed global markets following Britain's Brexit vote on June 23 was set to be an obstacle for the programme, according to two investors who were at the Wimbledon event.

"Ben said that post-Brexit, the disposals could take more than three years to complete," one source told Reuters, asking not to be identified because the event, hosted by Shell, was not open to the public.

The 58-year-old Dutchman, who has stated his ambition to make Shell the best oil company investment ahead of ExxonMobil , said Brexit "will make it more difficult to execute disposals", particularly in the North Sea, according to a second person who spoke to him.

A Shell spokesman said in response that "there has been no change to the previous statements we made on the three-year, US$30 billion divestment programme".

BAML also declined to comment.

The company said in June it wanted to exit 10 countries after merging with BG to sharpen its focus on gas production globally and deepwater exploration in Brazil.

Sales in the North Sea, an ageing oil basin that has seen production falling since the late 1990s, have been seen as particularly difficult following the halving of oil prices over the past two years.

A possible Scottish independence drive could further cloud the outlook for the North Sea oil industry and stall mergers and acquisitions in the region due to a lack of confidence in future regulations and taxes, one of the sources explained.

Shell's shares, together with those of British rival BP , have nevertheless made strong gains since the Brexit vote as the weaker British pound and their dollar dividends attract investors.