A Review of the Nigerian Energy Industry

Shell shops ‘$1bn pipeline stake’

Customers fuel up at a Shell gas station in Westminster29 January 2014, News Wires – Anglo-Dutch supermajor Shell is reportedly shopping a stake in an oil pipeline that stretches from Houston to Houma, Louisiana, partly to raise funds to invest in drilling.

Bloomberg, citing people familiar with the matter, reported that Shell is working with investment bank Barclays to solicit offers for a stake worth up to $1 billion in the so-called Ho-Ho pipeline.

The 350-mile (563-kilometre) line is said to be valued at around $3 billion in its entirety, according to the news wire.

Last year, Shell completed a reversal of the pipeline’s flows. It now carries oil from the Texas energy capital to Houma in order to give Gulf Coast refiners better to access to Eagle Ford and Bakken crude production.

The planned stake sale will go towards covering the costs of the reversal. Shell is also looking to raise cash to fund higher-return drilling projects, Bloomberg quoted sources as saying.

Spokesmen for Barclays and Shell declined to comment.

The Ho-Ho pipeline was known as the Houma-to-Houston pipeline prior to the flow reversal.

Shell warned last week that its fourth-quarter earnings had fallen due to rising losses in the Americas and deteriorating refining markets. The company is due to report quarterly earnings on Thursday.

The company has been substantially scaling back on investments in North America and has looked to sell oil properties in the Eagle Ford shale, the Mississippi Lime and in the Niobrara shale, among other areas.

It said in December that it would not proceed with plans to build a $20 billion gas-to-liquids plant in Louisiana due to project costs and uncertain commodity prices.

New chief executive Ben van Beurden has said the company plans a $15 billion divestment programme over the next two years.



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