Shell to sell Woodside stake, fearing Arab boycott

Royal Dutch Shell owns 23% of Australian company Woodside, which has agreed to buy 30% of the rights to the Leviathan field.

Energy giant Royal Dutch Shell plc (LSE: RDSA) will sell its holdings in Australian energy company Woodside Petroleum Ltd. (ASX: WPL) because of the Leviathan deal and concerns about the Arab boycott. Three months ago Woodside agreed to buy 30% of the Leviathan field's rights for $1.5 billion. Shell has a 23% stake in Woodside.

In a survey published by Commonwealth Bank of Australia (CBA) analysts Luke Smith and Lachlan Cuskelly wrote, "We anticipate a sell-down to dispel any perception amongst other Middle Eastern countries that Shell is investing either directly or indirectly in Israel."

The bank values Shell's stake in Woodside as worth $7.2 billion and believes that Australian mining company BHP Billiton Ltd., which also has energy interests, is a leading candidate to buy the shares. Shell said that the report was "speculation."

Shell, the world's largest public company according to Forbes 2012 rankings, has huge energy interests in the Middle East. Concern about the Arab boycott has deterred many major international energy companies from entering Israel's gas and oil energy exploration sector. British Gas was the only major international company that agreed to work in Israel but it abandoned the market in 2006.

Woodside, which specializes in liquid natural gas (LNG) projects in Australia, agreed to buy a 30% stake in Leviathan on December 3 2012.

Leviathan contains an estimated 18 trillion cubic feet of gas. The field is operated by Noble Energy Inc. (NYSE: NBL), which was a small US company when it moved into the Israeli market. Noble owns 39.66% of Leviathan, Delek Group Ltd. (TASE: DLEKG) units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling Limited Partnership (TASE: DEDR.L) own 22.67% each, and Ratio Oil Exploration (1992) LP (TASE:RATI.L) owns 15%.

Published by Globes [online], Israel business news - - on April 3, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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