Shell Inks Deal With Chevron To Expand Holdings In Trinidad

European oil giant, Royal Dutch Shell (LON:RDSa) plc RDS.A is set to increase its natural gas-rich holdings in the Republic of Trinidad and Tobago. The company recently inked a $250 million deal with the U.S. integrated major, Chevron Corporation (NYSE:CVX) , to acquire most of the latter’s gas-related assets in the twin-island Caribbean nation.

The twin island is considered the largest oil and gas producer in the Caribbean. With BP plc (NYSE:BP) being the biggest player in the region, Shell has been making efforts to augment its holdings in Trinidad and Tobago since its purchase of BG Group.

Shell has been performing its operations in the twin island since 1913 and holds major stakes in many projects in the region, including LeClerc deepwater gas discovery by BHP Billiton (LON:BLT) Ltd. (NYSE:BHP) . The Anglo-Dutch oil company conducts lubricants business and owns a lubricant blending plant in the region. Furthermore, Shell Global Services provides technical solutions and services to Petroleum Company of Trinidad and Tobago Limited. The company had also inked a deal to acquire stakes in Repsol (MC:REP), S.A.’s LNG portfolio in the region along with acquiring the entire portfolio of gas assets of British utility Centrica (LON:CNA) in a $30 million deal late last year.

Deal Highlights

Per the deal, Shell will buy all the shares of Chevron’s local subsidiary, Chevron Trinidad and Tobago Resources SRL, including 50% stake in three offshore natural gas fields in the East coast Marine Area in blocks E, 6 and 5(a). The average daily production of natural gas from these three fields — Dolphin, Dolphin Deep and Starfish — was 74 million cubic feet in 2016.

Shell will also acquire part of Chevron’s stake in the Manatee cross-border gas field shared with neighboring Venezuela. However, Chevron will retain its interest in the block on the Venezuelan side of the border. Furthermore, Shell will purchase Chevron’s entire stake in Trinling Ltd LNG transportation and marketing company.

The deal is expected to close around mid-year.

The deal is a prudent move as it enhances Shell’s integrated gas position in Trinidad and Tobago. The acquisition of natural gas fields will help the company to secure new competitive production opportunities. The purchase of stakes in Trinling Ltd will further allow Shell to integrate its operations smoothly.

The deal also supports Chevron’s efforts to manage and streamline its global portfolio and should be valuable for the corporation.

Zacks Rank

Headquartered in Netherlands, Shell is one of the largest integrated energy companies and is engaged in production, refining, distribution and marketing of oil and natural gas. Shell, operating under the Zacks categorized Oil & Gas-International Integrated industry, currently carries a Zacks Rank #5 (Strong Sell).

Royal Dutch Shell PLC Price

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