10 August 2012, Sweetcrude, CAIRO, Egypt – RWE AG, the German utility company, has shelved plans to sell oil and gas fields in Egypt aimed as a crucial debt-reduction plan.
The move suffered a setback due to a lack of interest from potential buyers amid the turmoil of the Arab Spring.
RWE had planned to sell the two undeveloped Egyptian oil and gas fields as part of a broader effort to cut debt and repair its balance sheet after Germany’s decision last year to accelerate a planned exit from nuclear power generation hurt the company’s profitability.
RWE has said it intends to sell assets worth 7 billion euros through 2013.
To date, however, the company has only realized about EUR1.5 billion of the total sales target, with analysts increasingly expressing their frustration of the lack of progress.
RWE holds 40% in the North Alexandria field and 20% in West Mediterranean Deep Water field in Egypt. The rest is held by BP PLC (BP). The people familiar with the matter previously said that the utility was looking for a price of up to about $1 billion for its stakes in the two exploration licenses.
By selling the Egyptian fields, RWE could have also saved about $3 billion in investment required to bring them to production, a saving that would have largely met its goal for reducing in capital expenditure. At the same time, the sale of the two fields would not dilute earnings, because the assets are not producing anything yet.
Other assets RWE is trying to sell to raise cash include its Czech gas transmission unit, NET4GAS, as well as several regional energy suppliers in Germany.
