Shell explores sale of a Norwegian natural gas business

[THE HAGUE] Royal Dutch Shell said it's considering a sale of a Norwegian natural gas supplier, as the energy major continues to selectively dispose of assets.

The company is exploring a disposal of its Gasnor unit, a spokesperson confirmed in response to Bloomberg queries. Shell has approached infrastructure funds and private equity firms about a deal, people with knowledge of the matter said, asking not to be identified as discussions are private.

Gasnor delivers liquefied natural gas to industrial and marine customers in Norway via 22 trucks and two tankers, according to its website. Shell agreed to take control of the business in 2012, paying US$74 million for shares it didn't already own at the time.

A potential sale comes at a time when Shell, like many of its peers, is looking for ways to transition to low-carbon energy. A string of divestments in countries including Argentina, Canada and the UK helped it cut greenhouse gas emissions in 2019, according to a report from the company. Shell sold part of its holding in the Nyhamna gas-processing plant in Norway last year.

The coronavirus outbreak has also exposed the vulnerability of some of the world's biggest fossil fuel companies, with the pandemic expected to hit long-term demand and reduce oil and gas prices. Shell's adjusted net income was US$638 million in the second quarter, down 82 per cent from the same period a year.

Its shares are down 48 per cent this year, giving the company a market value of around US$115 billion.

While the value of dealmaking in the energy sector has fallen by more than a third year-on-year in 2020 amid the coronavirus pandemic, according to data compiled by Bloomberg, there have been signs of a strong recovery in activity. The value of energy transactions has risen 93 per cent in the last three months to US$139 billion, compared with the same period a year ago, the data show.

The rise has been spurred by deals including the sale of a US$10.1 billion stake in Abu Dhabi's natural-gas pipelines to six investors including Global Infrastructure Partners, Brookfield Asset Management and Singapore's sovereign wealth fund GIC.

BLOOMBERG