Shell prunes debt with $10.3b sale of Canada oil sands

TORONTO • Royal Dutch Shell will sell almost all its production assets in Canada's oil sands, in a US$7.25 billion (S$10.3 billion) deal that reduces both debt and involvement in one of the most environmentally damaging forms of fossil fuel extraction.

Shell will sell all its oil sands interests, apart from a 10 per cent stake in the Athabasca Oil Sands mining project, it said yesterday. It will continue as operator of the Scotford upgrader and Quest carbon capture and storage project.

It is part-way through a US$30 billion divestment programme to cut debt, which soared after its US$54 billion acquisition of BG Group last year. It sold US$5 billion of assets last year, and this week got US$2.2 billion from the break-up of a refining partnership with Saudi Aramco.

Chief executive Ben van Beurden said last month that Shell was unlikely to take on new high-cost oil sands projects after the crude price slump.

It will sell to a unit of Canadian Natural Resources its 60 per cent interest in the Athabasca project, all Peace River Complex in situ assets and some undeveloped leases.

Those disposals will fetch about US$8.5 billion in cash and shares.

Shell and Canadian Natural will also jointly acquire and own Marathon Oil Canada, which holds a 20 per cent interest in the Athabasca project, from an affiliate of Marathon Oil Corp for US$1.25 billion each, to be settled in cash.

The deals are expected to be completed in the middle of the year, subject to regulatory approvals.

Oil sands are expensive to extract and have fallen out of favour following the market collapse.

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A version of this article appeared in the print edition of The Straits Times on March 10, 2017, with the headline 'Shell prunes debt with $10.3b sale of Canada oil sands'. Print Edition | Subscribe