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Shell Plans to Sell Iraqi Oil Fields: Focus on Divestments

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Shell plans to sell its oil fields in Iraq

Royal Dutch Shell (RDS.A) plans to sell its oil fields in Iraq. Before looking at the details of the sale, let’s take a quick look at what to expect from this series. In the next parts of the series, we’ll update you on Shell’s segment-wise divestment focus and analyst ratings for the company.

Let’s start by looking closely at Shell’s sales plan for its Iraqi oil fields.

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Shell’s restricted authority

According to various media reports, Shell is planning to sell its oil fields in Iraq, most likely due to its restricted authority on the fields. Its major projects in Iraq include the Majnoon oil field project and the Basrah Gas Company.

Reports also revealed that Shell isn’t planning to sell its gas fields in the country. However, the reports said that Shell’s spokesperson declined to comment on the Iraqi field sale plan. According to Shell’s website, Shell was presented with a 45.0% stake in the Majnoon oil field in January 2010.

This asset sale is part of Shell’s divestment strategy, which is meant to focus activities on its core assets. Shell expects to divest $30.0 billion worth of assets in 2016–2018, which includes the upstream as well as downstream assets. The sale of upstream assets is projected to impact its production volumes by ~10.0%.

In 2016, Shell expects to divest $6.0 billion–$8.0 billion worth of assets. This plan comes right after the sale of its refining and marketing business in Denmark, which marked Shell’s exit from the downstream business in the country.

The company has already completed the sale of $1.7 billion of assets and announced the sale of other $3.3 billion worth of assets. Other assets with sales in progress include Motiva. For more information on the Motiva breakup, please refer to Who Will Get What in Shell’s Motiva Breakup?

Other integrated players such as BP (BP), Exxon Mobil (XOM), and Chevron (CVX) are also rechurning their portfolios to focus on the most competitive assets that provide competitive returns, even in the lower oil price scenario.

For exposure to integrated energy stocks, you can consider the iShares US Energy (IYE). IYE has a ~41.0% exposure to integrated energy sector stocks.

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