Shell sells Canadian oil sands, ties bonuses to emissions cuts

Thu Mar 9, 2017 5:55pm EST
 
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By Karolin Schaps

LONDON (Reuters) - Royal Dutch Shell has agreed to sell most of its Canadian oil sands assets for $8.5 billion, the latest international oil major to withdraw from the costly and carbon-heavy projects.

Shell is trying to sell assets totaling $30 billion to cut debt following its $54 billion acquisition of BG Group and is under investor pressure to mitigate climate change risks.

Shell also said on Thursday that 10 percent of directors' bonuses will now be tied to how well it manages greenhouse gas emissions in refining, chemical and upstream operations.

Analysts welcomed the deal, under which Shell has agreed to sell its existing and undeveloped Canadian oil sands interests to Canadian Natural Resources and to cut its share in the Athabasca Oil Sands Project (AOSP) to 10 percent from 60 percent.

"This significant divestment should help de-gear Shell's balance sheet over 2017 and help remove concerns around the dividend," said Biraj Borkhataria, an analyst at RBC Capital Markets.

Shell is also buying half of Marathon Oil Canada Corp, which brings the deal's value for Shell to $7.25 billion and its divestment plan total to around $20 billion, as it works toward its target of $30 billion by late 2018.

Other oil firms including Exxon Mobil, Conoco Phillips and Statoil have written down or sold their Canadian oil sand assets.

Shell said it would remain as operator of the AOSP Scotford upgrader and the Quest carbon capture and storage project.   Continued...

 
Logos of Shell is pictured at a gas station in the western Canakkale province, Turkey April 25, 2016. REUTERS/Murad Sezer