Shell (SHEL.US) plans to sell Cyprus assets for up to $720 million, focusing on liquefied natural gas business

According to Zhihui Finance APP, Shell (SHEL.US) announced on Friday that it has agreed to sell its BG Cyprus subsidiary to Hungarian oil and gas group MOL Group, with the transaction amounting to up to $720 million. This move marks the UK energy giant’s further strategic shift towards the liquefied natural gas (LNG) business.

BG Cyprus holds a 35% non-operating interest in the offshore block of the Aphrodite gas field in the Eastern Mediterranean, Cyprus. The transaction is expected to be completed in 2027, when the relevant interests will be transferred to MOL.

Cederic Cremers, Shell’s Integrated Gas Business President, stated in the announcement: “Our decision to exit is driven by a disciplined approach to capital allocation and portfolio optimization, aiming to focus resources on opportunities that strengthen our integrated LNG value chain.”

In recent years, Shell has been committed to expanding its LNG asset portfolio to capture the growing global demand for natural gas. The company revealed on Thursday that it plans to make a final investment decision on the second phase of its Canadian LNG project by the end of 2026.

The Aphrodite gas field is located within Cyprus’s exclusive economic zone off the coast, operated by Chevron’s (CVX.US) Cyprus subsidiary, which holds a 35% interest, with BG Cyprus and Israel’s NewMed Energy holding 35% and 30% non-operating interests, respectively.

It is noteworthy that BG Group was acquired by Shell in 2016, and its Cyprus subsidiary had already obtained the relevant interests in the Aphrodite gas field as early as 2015.