Shell Egypt contracts $926M SPA for their upstream assets in Western Desert

CAIRO - 9 March 2021: Shell Egypt and one of its affiliates are engaged in a sales and purchase agreement (SPA) with a consortium made up of subsidiaries of Cheiron Petroleum Corporation and Cairn Energy PLC  for up to $926 million, for their upstream assets in Egypt’s Western Desert.

The company clarified in a statement Tuesday that the SPA worth $646 million with additional payments of up to $280 million between 2021 and 2024, contingent on the oil price and the results of further exploration.

The deal is expected to complete in the second half of 2021, it added noting that the transaction is subject to government and regulatory approvals.

A sales and purchase agreement (SPA) is a binding legal contract between two parties that obligates a transaction between a buyer and a seller.

According to Shell Egypt, the package of assets consists of Shell Egypt’s interest in 13 onshore concessions and the company’s share in the Badr El-Din Petroleum Company (BAPETCO).

“Today’s announcement is consistent with Shell’s efforts to shift our Upstream portfolio to one that is more focused, resilient and competitive” Shell’s Upstream Director Wael Sawan said.

“The deal will deliver value to Shell and to Egypt. It will enable Shell to concentrate on its offshore exploration and integrated value chain in Egypt, including seven new blocks in the Nile Delta, West Mediterranean and Red Sea. It will help Egypt maximize the potential of its onshore assets through new investment, helping secure energy and revenue for years to come.”

For his part, Shell’s Country Chair for Egypt Khaled Kacem, said: “We are proud of our history as one of the first oil and gas companies in the Western Desert, and as a partner in BAPETCO since its formation almost four decades ago. BAPETCO and the Western Desert concessions continue to provide revenue, jobs and energy for the country, while Egypt’s Modernization Programme will ensure that this will be the case for many years to come. I would like to pay tribute to the staff, stakeholders, partners and authorities who have contributed to the success of this key milestone and towards a deal completion in the near future.”