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Repsol sells package of LNG assets to Shell to cut its debt and hold to credit rating

Wednesday, February 27th 2013 - 01:49 UTC
Full article 3 comments
The Spanish company received a blow when Argentina seized control of its majority stake in YPF last April The Spanish company received a blow when Argentina seized control of its majority stake in YPF last April

Spanish energy giant Repsol SA said Tuesday that it agreed to sell a package of liquefied natural gas assets to Royal Dutch Shell Plc in a transaction valued at 6.65 billion dollars. Shell will pay 4.4bn in cash and assume 2.25bn in debt, Repsol said in a regulatory filing.

The Spanish company stands to net 3.5bn as part of the asset-shedding called for in its 2013-2016 strategic plan, Repsol said.

Repsol is selling Shell its minority stakes in Atlantic LNG, based in Trinidad and Tobago, Peru LNG and Spain’ss Bahia de Bizkaia Electricidad.

Tanker ships associated with those assets are also part of the deal, but Repsol's re-gasification plant in Canada was ultimately excluded and Shell is to supply the Canaport facility with one million tons of LNG over the next 10 years. Apparently Canaport failed to attract interest because booming US gas production has eroded its value.

The transaction, which is expected to close by year's end, will allow Repsol to reduce its net debt by half, the Spanish firm said.

The Spanish company has been under pressure to reduce debt and hold onto an investment-grade credit rating since the Argentine government seized control of its majority stake in energy company YPF last April.

It put the LNG assets up for sale last summer as part of a wider divestment programme aimed at cutting debt, which stood at 6.5bn dollars at the end of September, excluding debt related to its 30% stake in Gas Natural Fenosa.

Following the sale, net debt will fall to 2.2bn Euros, Repsol said.

The LNG sale had drawn interest from a range of bidders including China's Sinopec, Russia's Gazprom, GAIL Ltd of India and GDF Suez of France.

Shell is already the top LNG producer among the world's biggest oil companies. It has 22 million tonnes per year (mtpa) of LNG on stream - more than a tenth of global demand - and is building 7 mtpa of new LNG capacity in Australia that will increase its production by 30% over the next few years.

This deal adds a further 4 mtpa of owned capacity, taking its production to about 33 mtpa by 2017. Its closest rival among the oil majors is Exxon Mobil, which is expected to have about 20 mtpa of production in 2017.

The deal also widens its geographic reach in LNG into the West Atlantic from Atlantic LNG in Trinidad & Tobago where it will become a partner with BG Group, and into the East Pacific from Peru LNG.

These additions will complement Shell's existing LNG capacity in Africa, Asia, Australia, the Middle East and Russia, the company said.

Top Comments

Disclaimer & comment rules
  • Orbit

    CFK f*cks things up, other people have to clean up the resulting mess. Nice legacy.

    Feb 27th, 2013 - 09:03 am 0
  • DanyBerger


    Poor Spanish without YPF their are strangling to keep afloat...

    Feb 28th, 2013 - 04:11 am 0
  • ChrisR

    @2 Dunny-Burger

    Yes, well you know how that feels don't you.

    Still, come the new default things will really get interesting in AR.

    Repsol were stupid enough to get involved with TMBOA and her delusions and have taken sensible actions to keep the company stable.

    How many investors in YPF have there been who have PUT MONEY UP FRONT?

    Answer: NONE.

    How many investors in YPF have actually SIGNED LONG-TERM CONTRACTS?

    Answer: NONE.

    Really going well at YPF then!

    Mar 01st, 2013 - 08:17 pm 0
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