SINGAPORE (Reuters) - Royal Dutch Shell said on Wednesday it has cancelled a $900 million deal to sell its gas field stakes in Thailand to Kuwait Foreign Petroleum Exploration Company (KUFPEC).
Shell and KUFPEC announced the deal in January, and it was due to be completed in the first quarter of 2017.
“Although Shell and the Thai government have worked together closely and collaboratively on the matter, the different interpretations of the treatment of share sale transactions were not resolved within Shell and KUFPEC’s agreed timeframe,” a Shell spokeswoman said in an e-mail.
“Therefore, both parties jointly decided to terminate the transaction,” she said.
The sale was part of efforts by the Anglo-Dutch company to reduce debt after buying smaller rival BG Group for $70 billion.
“To date, the company has more than $25 billion in completed, announced or in progress divestments, on track to meet its target of $30 billion of divestments between 2016 and 2018,” Shell said in a statement.
The deal had called for Shell to divest its shares in two subsidiaries - Shell Integrated Gas Thailand Pte Ltd (SIGT) and Thai Energy Co Ltd (TEC) - to KUFPEC’s unit in Thailand.
SIGT and TEC together hold a 22.222 percent equity stake in the Bongkot natural gas field and adjoining acreages offshore Thailand consisting of blocks 15, 16, 17 and G12/48.
PTT Exploration and Production PCL operates the offshore Bongkot field with a 44.445-percent equity. France’s Total has a 33.333 percent stake.
Besides continuing to support operations and development at Bongkot, SIGT also intends to participate in the forthcoming licensing round for the extension of the Bongkot concession, Shell said.
“Having almost met its $30 billion divestment target, there’s no longer the same pressure on Shell to sell,” said Andrew Harwood, research director of Asia Pacific upstream oil and gas at Wood Mackenzie.
“Thailand remains a small but profitable part of Shell’s portfolio in Southeast Asia,” he said.
“With the Bongkot concession set to expire in 2023, we’d expect Shell and the other Bongkot partners to bid in the upcoming auction for the next phase of the project.”
Reporting by Florence Tan; Editing by Tom Hogue