Asia Pacific

Petronas buys Shah Deniz stake

Statoil ... selling Shah Deniz’s stake

Statoil, Norway’s biggest energy company, will sell its 15.5 per cent stake in the Shah Deniz field in Azerbaijan to Malaysia’s Petroliam Nasional for $2.25 billion as it seeks to reduce investment and prioritise high-value projects.

The transaction includes sales of the interests in the field’s production-sharing agreement, the South Caucasus Pipeline Co. and its holding company, and a 12.4 per cent stake in the Azerbaijan Gas Supply Co., the Stavanger-based company said in a statement.

The deal reduces Statoil’s capital-expenditure commitments by about $4.3 billion as the Shah Deniz partners, led by operator BP, invest to expand gas exports in the project’s second phase, Knut Rostad, a spokesman said.

“This is yet another sign of Statoil’s priority of value over volume, focus on return on average capital employed, cash flow and dividend capacity,” Teodor Sveen Nilsen, an analyst at Swedbank, said in a note to clients. The deal increases the probability that Statoil will further reduce its investment plans for next year, he said.

Statoil’s exit follows Total’s $1.5 billion sale of its 10 per cent stake in the Shah Deniz project in May as big oil companies seek to rein in investments to fight rising costs and falling returns. The second phase of Shah Deniz in the Caspian Sea, which will boost gas production for export through new pipelines as far as Italy and reduce Europe’s dependency on Russian fuel, is expected to cost $28 billion. Statoil, which has scrapped production-growth targets and reduced investment plans until 2016 as it seeks to raise returns for shareholders, has sold assets for more than $22 billion since 2010, including a 10 per cent stake in Shah Deniz in 2013.

“The divestment optimizes our portfolio and strengthens our financial flexibility to prioritize industrial development and high-value growth,” Lars Christian Bacher, executive vice president for development and production international, said in the statement.