Shell, Exxon launch sale of major Dutch gas venture, sources say
By Innocent Obasi
The 50-50 NAM joint venture between ExxonMobil and Shell, two of the supermajors, in the Netherlands has been put up for sale, with the companies aiming to get over $1 billion for one of Europe’s biggest and oldest natural gas production companies, Reuters reported on Tuesday citing two industry sources.
The sale of the 50/50 NAM joint venture in the Netherlands would be a part of both firms’ measures to shed ageing assets that are no longer essential to their operations.
Shell and Exxon recently began the sale process for NAM’s offshore gas activities, which include numerous fields, about 20 offshore platforms, a network of pipelines, and three processing plants, according to sources and a document.
Following the discovery of the massive Groningen field in 1963, NAM began producing natural gas and has since been a significant gas supplier for the Netherlands and Europe.
Despite this, since 2014, its output has been steadily declining, and it is expected to continue to do so in the years to come as a result of the Dutch government’s decision to shut Groningen in order to reduce the seismic risk in the area. According to the government, the field is expected to shut down in 2023 or 2024, though this could be extended.
In 2021, the offshore and onshore NAM assets that are up for sale produced about 2.4 million cubic metres of natural gas per day, with the potential to reach 2.8 mcm per day with additional investment, according to the document.
However, according to the sources, the joint venture includes a number of older assets that will cost much to dismantle and clean up after they are shut down.
The collection of assets also includes NAM’s stakes in multiple pipeline networks as well as stakes in three gas processing facilities at the Den Helder Terminal, which processes 53 percent of the gas produced on Dutch offshore fields.
According to sources, the assets have a value of between $1 billion and $1.5 billion.
As Europe’s primary gas supplier, Russia has restricted exports to the region in response to Western sanctions against Moscow following its invasion of Ukraine in February, it has become difficult to assign a value to such assets recently due to the significant fluctuations in long-term natural gas prices.
However, according to the sources, Shell and Exxon remain optimistic that interest in the NAM joint venture would increase as a result of Europe’s rising attention to domestic energy generation.
After the government decided to shut down the Groningen field, NAM said in October 2021 that it plans to sell its oil and gas fields in the Netherlands in the upcoming years.