Shell said to sell Brazil offshore fields to HRT in oil rout

[RIO DE JANEIRO] Royal Dutch Shell Plc, the second-largest oil operator in Brazil, is selling a stake in one of its crude- producing projects in the country to HRT Participacoes em Petroleo SA, two people with knowledge of the matter said.

HRT, based in Rio de Janeiro, agreed to buy Shell's 80 per cent stake in the Bijupira and Salema fields, an offshore venture that started production in 2003, the people said, asking not to be identified because the deal hasn't been made public. HRT will boost production to more than 30,000 barrels a day with the purchase, which may be announced as early as Tuesday, one of the people said.

Shell doesn't comment on market speculation, it said in an e-mailed response. HRT didn't respond to a request for comment.

Oil companies are retreating from high-cost projects and selling assets across the globe as crude's six-month slump of more than 50 per cent erodes profit. This month, producers including Statoil ASA, Tullow Oil Plc and Premier Oil have delayed projects or cut exploration spending. For Shell, declining output in Brazil as reservoirs fade has increased the cost of extracting the remaining crude, one of the people said.

The deal would be the second Brazilian asset sale in a year for the Hague-based company after agreeing to sell a 23 per cent of the Parque das Conchas project to Qatar Petroleum International Ltd for about US$1 billion. Shell completed US$11.6 billion in divestments in the first nine months of 2014 as it seeks to rein in costs, the company said Oct 30.

Stock Plunge Shell is the biggest operator in Brazil after state-run Petroleo Brasileiro SA and has spent more than US$7 billion on exploration and production there since 1998, according to the company's website. It extracted 76,800 barrels a day in November from Parque das Conchas and Bijupira and Salema, data from Brazil's oil regulator shows.

Petrobras, as Brazil's largest oil company is known, holds the remaining 20 per cent of Bijupira and Salema. Shell operates Parque das Conchas with a 50 per cent stake and has Oil & Natural Gas Corp, India's biggest energy explorer, as partner together with Qatar Petroleum.

HRT, the oil startup listed in 2010, last year became operational after agreeing to buy a 60 per cent stake in the offshore Polvo field in Brazil's Campos basin from BP Plc. The company is Brazil's seventh largest operator with 7,219 barrels daily output in November, according to ANP.

Shares of HRT jumped 15 per cent to 3.30 reais at 12:34 pm in Sao Paulo, reducing the stock's 12-month decline to 73 per cent. Shell gained 0.2 per cent to 2,125.5 pence in London. West Texas Intermediate oil slid 4.1 per cent to US$46.70 a barrel, about half the price of a year ago.

BLOOMBERG