Woodside’s Deal in Israel May Prompt Shell to Sell, CBA Says

Woodside Petroleum Ltd.’s agreement to acquire a stake in Israel’s largest natural gas field may prompt Royal Dutch Shell Plc to sell the rest of its holding in the Perth-based company, Commonwealth Bank of Australia said.

“We anticipate a sell-down to dispel any perception amongst other Middle Eastern countries that Shell is investing either directly or indirectly in Israel,” considering the geopolitical tension and Shell’s significant investment in the region outside the country, Luke Smith and Lachlan Cuskelly, Sydney-based analysts at CBA, said in a March 27 report.

BHP Billiton Ltd., Australia’s largest oil and gas producer, is a potential buyer of Woodside, the analysts said. Any sale of the shares would probably occur after Woodside, which agreed in December to buy 30 percent of the Leviathan gas field in Israel for an initial $696 million, considers an investment decision on the proposed Browse liquefied natural gas project in Australia in mid-2013, according to the report.

Shell, which still owns a 23 percent stake valued at A$6.8 billion ($7.1 billion), said last year that the stake didn’t fit with the company’s long-term plans. Woodside, Australia’s second-largest oil and gas producer, has slumped in Sydney trading since The Hague-based Shell sold 10 percent of the company at A$42.23 a share in November 2010.

Woodside’s shares declined 0.6 percent today to A$35.77.

Paul Zennaro, a Melbourne-based spokesman for Shell, said the company wouldn’t comment on speculation. Fiona Hadley, a spokeswoman for BHP in Melbourne, and Laura Lunt, a spokeswoman for Woodside in Perth, declined to comment on the report.