Statoil Sells Shah Deniz Stake to Petronas for $2.25 Billion

Statoil ASA, Norway’s biggest energy company, will sell its 15.5 percent stake in the Shah Deniz field in Azerbaijan to Malaysia’s Petroliam Nasional Bhd for $2.25 billion as it seeks to reduce investment and prioritize high-value projects.

The transaction includes sales of the interests in the field’s production-sharing agreement, the South Caucasus Pipeline Co. and its holding company, and a 12.4 percent stake in the Azerbaijan Gas Supply Co., the Stavanger-based company said in a statement today. The deal reduces Statoil’s capital-expenditure commitments by about $4.3 billion as the Shah Deniz partners, led by operator BP Plc, invest to expand gas exports in the project’s second phase, Knut Rostad, a spokesman, said in a phone interview.

“This is yet another sign of Statoil’s priority of value over volume, focus on return on average capital employed, cash flow and dividend capacity,” Teodor Sveen Nilsen, an analyst at Swedbank AB, said in a note to clients. The deal increases the probability that Statoil will further reduce its investment plans for next year, he said.

Statoil’s exit follows Total SA’s $1.5 billion sale of its 10 percent stake in the Shah Deniz project in May as big oil companies seek to rein in investments to fight rising costs and falling returns. The second phase of Shah Deniz in the Caspian Sea, which will boost gas production for export through new pipelines as far as Italy and reduce Europe’s dependency on Russian fuel, is expected to cost $28 billion.

Asset Sales

Statoil, which has scrapped production-growth targets and reduced investment plans until 2016 as it seeks to raise returns for shareholders, has sold assets for more than $22 billion since 2010, including a 10 percent stake in Shah Deniz in 2013.

“The divestment optimizes our portfolio and strengthens our financial flexibility to prioritize industrial development and high-value growth,” Lars Christian Bacher, executive vice president for development and production international, said in the statement.

The stock closed 1.2 percent higher at 160.2 kroner in Oslo, snapping eight days of declines.

Statoil’s second-quarter production from the Shah Deniz field was 38,000 barrels of oil equivalent a day. The transaction, effective from Jan. 1, 2014, is expected to close in early 2015, according to Statoil. The accounting gain is expected to exceed $1 billion, Rostad said.

Petronas Assets

Petronas, Malaysia’s state-owned energy company, has exploration and production ventures in at least 22 countries in Southeast Asia, the Middle East, Central Asia, Latin America and Africa, accounting for almost a quarter of its total oil and gas reserves, it said on its website.

The company last month announced it signed agreements with Mexico and Argentina to expand its operations in the region. Petronas said this month it may delay construction of its C$10 billion ($8.9 billion) Canadian liquefied natural gas project past 2030 unless proposed taxes are lowered.

Statoil remains a stakeholder in the Azeri, Chirag and Gunashli oilfield in Azerbaijan, as well as the Trans Adriatic Pipeline.

(An earlier version of this story was corrected because of an error in a company name.)

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