Report says Royal Dutch Shell's sale of Woodside Petroleum may pave way for Asian buyers

December 15
7:53 PM 2013

The sale of Royal Dutch Shell's $6.4 billion stake in Woodside Petroleum Ltd may pave the way for buyers in Asia to acquire the second largest oil and gas producer in Australia wholly or in part, Bloomberg reported.

Citing Nomura Holdings Inc, the report said the largest oil firm in Europe may divest the 23% stake it holds in Woodside as early as next year as it loses its importance to Shell. Morningstar Inc also said that although Shell may decide to sell the stock back to Woodside and institutional investors, it is also possible for China-based CNOOC Ltd and China Petroleum & Chemical Corp to offer a bid for the stake or even a full takeover, the report said.

With a market value of $28 billion, Woodside holds six of the seven liquefied natural gas processing plants in Australia. Led by China, the demand for LNG is predicted to nearly double globally by 2030. The report quoted John Robertson, a Melbourne-based investor at EIM Capital who has shares in Woodside, as saying that the sale "opens it up for somebody." He added, "There's going to be rising energy demand throughout Asia, particularly in China."

Bloomberg data also showed that Woodside had become more affordable after its multiple to cash flow had more than halved since 2011, the report said. Morningstar Analyst Mark Taylor also said that the Australian government is not likely to block the deal.  

Shell, who holds the largest stake in the Australian producer had said in 2012 that Woodside no longer fit into its long-term plans. Shell Chief Financial Officer Simon Henry said in May this year that the investment was "no longer strategic" and that it would eventually divest the stake.

The report quoted Nomura analyst Theepan Jothilingam who is based in London as saying that the stake has increasingly grown non-core to Shell as Woodside expands abroad.

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