Shell to sell stake in California company as fossil divestment continues

Quantum Commodity Intelligence - Shell is planning to sell its stake in Aera Energy, its California-based oil and gas-producing joint venture with Exxon Mobil, as it continues to shrink its fossil fuel portfolio, according to Reuters, citing four sources.

Aera Energy produces about 125,000 barrels of oil and 32 million cubic feet of natural gas each day, accounting for about 25% of the state's oil and gas production, the company claims.

California produced 363,000 barrels of crude in April, down 12.2% year-on-year, and 390 million cubic feet of natural gas, down 20.3% from a year earlier, according to the US Energy Information Administration.

Early this year, Shell announced plans to accelerate its transformation to a low-carbon energy provider and said its oil production peaked in 2019.

In the US, the oil major has already sold the Puget refinery in Washington state to Holly Frontier for $350 million, as well as the plant's inventory, and also its interest in the Deer Park refinery complex in Texas to its partner Petroleos Mexicanos (Pemex) for $596 million.

Shell is also looking to sell its stake in the Permian Basin.

The field, which sits mostly within Texas and entitles Shell to a share of 193,000 barrels of oil equivalent per day, was worth 6% of the company's total oil and gas output in 2020, according to sources.

In May, Chief Executive Ben van Beurden said the company was in talks with the Nigerian government to sell its onshore oilfields in the country.

Shell's Nigerian onshore joint venture SPDC has sold about 50% of its oil assets over the past decade.

Shell's stake in SPDC gave it 156,000 barrels per day of oil equivalent in 2020, of which 66,000 barrels were oil.

In May, Shell also sold its 45% stake in the Malampaya offshore gas field in the Philippines for $460 million.

The base consideration for the sale is $380 million, with additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices, Shell said in a statement.

Despite the divestment program, a Dutch court told Shell in may that it needed to reduce its emissions quicker than it had planned, moving to 45% below 2019 levels by 2030.

This contrasts with Shell's target to cut the total carbon intensity of the products it sells by 6% by 2023, 20% by 2030, 45% by 2035 and to reach net-zero by 2050.

Shell plans to appeal the ruling.