Shell sells Argentina downstream business, makes U.S. Gulf of Mexico investment

The Hague-based LNG giant Shell has signed a deal to sell its downstream business in Argentina to Raízen for $0.95 billion.

The sale includes the Buenos Aires Refinery, around 645 retail stations, liquefied petroleum gas, marine fuels, aviation fuels, bitumen, chemicals and lubricants businesses, as well as supply and distribution activities in the country, shell said in a statement on Tuesday.

Additionally, after the transaction closes, the businesses acquired by Raízen will continue their relationships with Shell through various commercial agreements, which represent an estimated value of $0.3 billion, it said.

Raízen, a joint venture set up in 2011 between Shell and Cosan, is a biofuels producer and fuels distributor in Brazil, where it already manages more than 6,000 Shell service stations.

According to Shell, the sale is part of its $30 billion asset disposal program following the takeover of UK-based LNG player BG Group in 2016.

The sale does not include Shell’s upstream interests in the Vaca Muerta shale formation.

Shell said it sees substantial long-term growth potential in Argentina’s shale resources.

U.S. Gulf of Mexico investment

In a separate statement, Shell through its Shell Offshore unit announced the final investment decision for Vito, a deep-water development in the U.S. Gulf of Mexico with a forward-looking, break-even price estimated to be less than $35 per barrel.

This decision sets in motion the construction and fabrication of a new, simplified host design and subsea infrastructure, the statement noted.

Vito is expected to reach peak production of approximately 100,000 barrels of oil equivalent (boe) per day. The development currently has an estimated, recoverable resource of 300 million boe.

The Vito development is owned by Shell Offshore Inc. (63.11% operator) and Statoil USA E&P Inc. (36.89%); the field is located beneath more than 4,000 feet of water, approximately 150-miles southeast of New Orleans.