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    Shell Divests Gaza Interest

Summary

Shell has divested its sole interest offshore Palestine.

by: Mark Smedley

Posted in:

Natural Gas & LNG News, Europe, Middle East, Gas to Power, Corporate, Exploration & Production, Political, East Med Focus, News By Country, Palestine

Shell Divests Gaza Interest

Shell announced April 4 that it has divested its entire 90% interest and operatorship in the Gaza Marine licence to the Palestine Investment Fund (PIF), a sovereign wealth fund.

"This deal is consistent with Shell’s strategy to high-grade and simplify our portfolio. It helps to concentrate our upstream footprint where we can be most competitive and build our world-class investment case. Government and partner consents have been obtained. The equity has been transferred to PIF at signing of the Sale and Purchase Agreement," Shell said. It was Shell's only project in Palestine.

Neither disclosed any price for the transaction.  PIF added that, under the new structure approved by the Palestinian cabinet for the licence, PIF and the Palestinian-owned contractor Consolidated Contractors Company (CCC) will each hold 27.5% of the development rights pursuant to existing options under the license agreement, and an (unspecified) international operator will hold 45%. 

"The new structure gives momentum to the development of one of Palestine’s most vital, strategic assets. Gaza Marine’s development is central to PIF, its development partner, and the State of Palestine’s vision for domestic energy security backed by a thriving energy sector. Gaza Marine would satisfy Palestine’s market demand for gas—fueling power plants in Gaza and Jenin—and enable Palestine to become an energy exporter," said PIF.

It said that, together with CCC, will focus their efforts on identifying a capable international operator, advancing gas sales agreements and preparing a development plan for the field - which holds 1 trillion ft3 of gas and was discovered in 2000 by BG -- with the selected operator.

"The field’s development is feasible—Shell’s divestment is related to their corporate strategy and global portfolio management priorities," PIF insisted.

The 25-year licence was awarded in 1999 to BG, then partnered by CCC, plus the still remaining Palestinian Investment Fund. Shell bought BG in 2016 and last month acknowledged it was looking to offload its Gaza interest.