Royal Dutch Shell has agreed to acquire part of the LNG portfolio of Spain-based Repsol, the companies confirmed on Tuesday.
Long rumored, the acquisition includes LNG assets outside of North America, including supply positions in Peru and Trinidad & Tobago, for a cash consideration of $4.4 billion. A Spanish terminal is also in the deal.
Shell will also assume and consolidate balance sheet liabilities predominantly reflecting leases for LNG ship charters of currently $1.8 billion. The balance sheet impacts are subject to final assessment prior to deal completion, officials said.
"Shell's world-wide LNG supply position and customer base means we are uniquely positioned to add value to Repsol's LNG portfolio, including through Shell's trading capabilities," said CEO Peter Voser.
"By optimizing the combined portfolios we will increase our ability to bring LNG to areas that need it the most, adding value for Shell, our partners and our customers," he added.
The acquisition will add a new dynamic to Shell's portfolio, namely LNG capacity in the West Atlantic from Atlantic LNG in Trinidad & Tobago, and in the East Pacific from Peru LNG. These additions will complement Shell's existing LNG capacity in Africa, Asia, Australia, the Middle East and Russia.
The acquisition should add some 7.2 million tpy of LNG volumes through long-term off-take agreements, including some 4 million tpy of equity LNG plant capacity.
Shell said it expects to add value to this portfolio by optimizing the new LNG flows with its global customer base. Subject to successful completion, the new portfolio is expected to immediately provide additional cash flow to Shell, with limited on-going capital expenditure requirements.
The transaction, which has an effective date of October 1, 2012, is expected to close in the second half of 2013 or early 2014, subject to regulatory approvals and other conditions precedent.