Shell Weighs $24 Billion Stake Sale in Australian LNG Project

Shell is in talks with ADNOC and Midocean Energy on the potential sale of its minority stake in the Australian North West Shelf LNG project, Bloomberg has reported, citing unnamed sources.

The supermajor holds a 16.67% in the project, which is worth some $24 billion. An earlier Bloomberg report said Shell had started considering a sale following changes to how the North West Shelf project would operate, namely as a so-called third-party tolling facility, meaning buyers of the gas pay a fee to have it liquefied.

Woodside’s North West Shelf gas processing plant in Karratha, Western Australia, is the country’s first and largest LNG plant. Its life was recently extended until 2070, from an initial term until 2030. Woodside first applied for the extension back in 2018. State and federal governments spent the time since then reviewing the plans to extend the project’s life beyond 2030 amid hundreds of appeals by activists campaigning to preserve the environment and the cultural heritage of the local people.

In response to those appeals, the project will be required to reduce its emissions every year and reach net zero greenhouse gas emissions by 2050 under the Albanese government’s strengthened Safeguard Mechanism.

Australia is one of the world’s top three producers of liquefied natural gas, featuring some of the largest projects globally. Shell is a major player in that space, but it appears the third-party toll scheme is sub-optimal for the company.

Earlier this month, Shell’s chief executive predicted that the global LNG market was set for an annual expansion rate of 3%, which is much faster than the broader natural gas market. New LNG export projects coming online and ramp-ups of recently commissioned facilities are expected to drive a 10% jump in global LNG supply this year, as the market shifts from tightness to abundance.

By Irina Slav for Oilprice.com

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