Royal Dutch Shell plc (ADR) ADR Class A (NYSE:RDS.A) recently announced that it had divested its stake in Mukhaizna oilfield from Oman to Indian Oil Corporation, the largest oil company in India. The European oil company laid off its whole 17% stake in the oil field to IOCL Singapore PTE Ltd, which is a full-owned subsidiary of Indian Oil. The deal is worth $329 million.
Occidental Mukhaizna LLC, which is a subsidiary of Occidental Petroleum Corporation OXY is the majority stakeholder in the Mukhaizna field and has 45% stake. Some of Shell’s partners in the field include TOTAL E&P Oman, a fully-owned subsidiary of TOTAL S.A. TOT, Liwa Energy Limited, Oman Oil Company and Partex (Oman) Corporation.
Mukhaizna oilfield is the biggest oilfield in Oman and accounts for 13% of all the oil produced which amounts to 120,000 barrels. This transaction will mark the first main acquisition undertaken by Indian Oil in Oman and is likely to improve its presence in the global market as well as open growth opportunities in the whole Middle East region. Additionally, the deal will boost the energy security of India.
The transaction will allow Shell to implement its $30 billion divestment program. The deal offers the company with a significant uplifting in its move to cut on its debt, after the acquisition of BG Group in a deal to that cost the company $47 billion. The divestment program is expected to cut the company’s cost and boost cash flow plus return to capital. Additionally, the deal will be in a better position to streamline and upgrade its main portfolio.
With the company already finalizing divestment deal amounting to over $23 billion, it is focusing on meeting its 2018 targets. Additionally, the company has announced that it is disposing of some assets amounting to about $2 billion and is currently having talks for potential transactions of another $5 billion divestment deals. The talks are already in advanced stages.
Shell, which has its headquarters in Netherlands, is one of the biggest energy companies which is engaged in the refining, production, distribution, and marketing of oil and natural gas.