Shell considers selling part of stake in Basrah Gas Company – sources

20 Jul 16 – Royal Dutch Shell [LON:RDSA], the Anglo-Dutch oil giant, is considering selling part of its 44% stake in Basrah Gas Company to reduce its exposure to the company, a source familiar with and a person briefed on the situation said.

 The size of the stake Shell would consider selling in the Iraqi company was not disclosed. 

Basrah Gas Company was formed in 2013 to collect gas from three oil Iraqi fields. It produces up to 544m of standard cubic feet per day, according to the company. 

South Gas Company owns 51% of the Iraqi company, and Mitsubishi the remaining 5%.

Basrah Gas is heavily leveraged, and has not paid Shell the receivables it owes for 2016, the source familiar said.

A spokesperson for Shell declined to comment or disclose Basrah Gas Company’s financials. 

Low oil prices have sharply reduced the Iraqi government’s revenues and have caused an outstanding amount due to the international oil companies (IOCs). The prolonged decline in oil prices over nearly two years has made it difficult to make payments on time, a sector expert noted.

“It is not surprising Shell is looking to reduce its exposure to Basrah Gas Company,” the sector expert said. “The Iraqi government is not investing in the company, so why should Shell pour more money in?”

Basrah Gas Company, South Gas Company and Mitsubishi did not respond to requests for comment or supply details of Basrah Gas Company’s financials. 

Shell has a market capitalisation of GBP 202bn. It has embarked on a three-year GBP 30bn asset disposal and could look to exit operations in up to 10 countries following its mega-merger with BG, as reported.

The oil major is set to soon to launch the sale of Shell New Zealand, as reported, and is also assessing options to monetise its North Sea portfolio, as per previous press reports.

by Katie McQue