Shell considers selling its NZ assets after more than a century

Thursday, 10 December 2015

Shell is considering selling its New Zealand assets.

Country chairman Rob Jager said its interests in New Zealand were 'under review'.

'The Shell business in New Zealand is a great, but a small part of the global Shell business and hence the decision to undertake a strategic review at this time,' Jager said.

'We are very conscious of the uncertainty this creates for local staff and New Zealand staff abroad, and we will commit to moving quickly through this review process and to keeping people informed on the outcome of the review.'

Jager insisted that no decisions had been made. While an announcement about the future of the business would be made as soon as possible, Jager said it was likely to take months rather than weeks.

It would be 'inappropriate' to place a value on the various assets which the company owned, but Jager said they were 'profitable, well maintained'.

Royal Dutch Shell has operated in New Zealand for more than 100 years, and was for a long time New Zealand's largest fuel retailer, until in 2010 it sold its downstream interests to Infratil and the New Zealand Superannuation Fund. That company now trades as Z Energy.

Shell still owns substantial stakes in the Maui, Kapuni and Pohokura fields and has a 50 per cent interest in Shell Todd Oil Services. According to Jager its assets account for about 70 per cent of New Zealand's natural gas production.

It also owns some exploration permits, including in the Great Southern Basin.

Jager, who had worked for Shell for close to four decades said the company was part of who he was.

'As someone who has worked for Shell for nearly 38 years, you will appreciate that it's not an easy announcement for me to make. I'm hugely proud and indeed committed to the business. It is part of who I am,' Jager said. The company was a 'proud contributor to the country'.

For the time being it was 'business as usual' and Shell would continue to operate its assets safely.

Jager said the review had been made public because he wanted it to be well informed and that staff should not be the subject of 'rumour'.

'It can only be well informed by being part and being involved with staff in New Zealand.'

Shell Todd Oil Services employs around 360 staff while Shell New Zealand has around 70 staff.

The sale of the Maui gas pipeline was separate to the review and would continue.

Shell announcement 'not a reflection of local performance' in Taranaki

Shell's announcement it was considering selling its New Zealand assets has added to uncertainty in an industry already struggling.

Shell New Zealand Chairman Rob Jager said the review was to keep New Zealand in line with Shell's global strategy.

The past year has been a rough one for the sector in Taranaki and news of the review comes just weeks after the announcement of a $70 million maintenance project at Pohokura and the undertaking of New Zealand's biggest seismic surveying.

Jager said the company 'we're just looking at options for New Zealand at this stage'.

'This may range from business as normal to a complete exit from the country.'

Jager said that even if Shell were to 'make a complete exit' then the facilities and assets owned by Shell would still need to be kept up and running.

'It doesn't't matter whether it is us who keeps those running or another owner,' he said.

'Clearly it will cause some concern for some people. We have been an integral part of the Taranaki community.'

Taranaki is by far the biggest contributor to the Shell workforce with all of the 360 Shell Todd Energy Services employees working in the region.

Chairman of the Taranaki Energy Consortium Graham Wells said any good company needed to conduct a review from time to time.

'Shell have been a major contributor in the region,' he said.

'Obviously we hope the review will see them continually involved. But if they decide to do something different there will still be a need for their fields to be operated and maintained whether that's for STOS or another owner.

'With change there are always concerns but there is still work that needs to be done.'

Chief Executive of Venture Taranaki Stuart trundle said Shell had made a significant contribution to Taranaki.

'The review announced today is not a reflection of local performance,' he said.

'Rather one of simplifying global portfolios to focus on core strategic themes such as deep water and LNG.

'The current low global oil price is causing considerable analysis and review throughout the industry.

'There is ongoing change in the investment model and ownership structure of the industry, and New Zealand is not immune.'