Shell explores stake sale in North West Shelf

Talks are centred on Shell’s holding in the A$34 billion development, one of Australia’s longest-running LNG export ventures, located near Karratha in Western Australia. The conversations are described as being at an early stage, with no certainty that a transaction will proceed. The parties involved have declined public comment, and the deliberations remain confidential.

Adnoc’s investment arm XRG is among the entities assessing the opportunity, the people said, alongside Midocean Energy LLC, a liquefied natural gas-focused company backed by US investment firm EIG. Saudi Aramco acquired a minority stake in Midocean in 2023, giving the Saudi group exposure to a portfolio of LNG assets across Australia and the Americas. Other suitors are also understood to be evaluating the asset.

North West Shelf has been exporting LNG since 1989 and remains a cornerstone of Australia’s gas sector. The project comprises offshore fields and the onshore Karratha Gas Plant, with LNG primarily shipped to Asian markets including Japan and South Korea. Woodside Energy operates the venture, with partners that include BP, Chevron, Mitsui and Mitsubishi. Shell’s stake, held following its acquisition of BG Group in 2016 and legacy investments in Australia, represents a strategic position in one of the Asia-Pacific region’s most established export hubs.

Any sale would align with Shell’s broader portfolio reshaping under chief executive Wael Sawan, who has sought to streamline operations and focus capital on assets that deliver higher returns and lower carbon intensity. The company has emphasised disciplined spending, divestments of non-core holdings and optimisation of its integrated gas business, which remains central to earnings. LNG has become a pillar of Shell’s strategy as demand in Asia and Europe continues amid energy security concerns and the transition away from coal.

Market analysts say partial divestments of mature LNG assets can free up capital while retaining operational exposure. North West Shelf is considered a lower-growth project compared with newer Australian ventures such as Pluto LNG or Queensland Curtis LNG, though it continues to generate stable cash flows. Production from some of its offshore fields has been declining, and the project’s long-term future is linked to proposals to process gas from the Browse field, which require regulatory approval.

For Adnoc, participation would mark another step in its international expansion drive. The Abu Dhabi producer has been pursuing stakes in gas and chemicals assets outside the United Arab Emirates, seeking to diversify revenue and secure market access. Its investment vehicles have explored opportunities in Europe and Asia, reflecting a strategy to complement domestic upstream growth with overseas partnerships.

Midocean, meanwhile, was established by EIG in 2022 to build a global LNG platform. Its portfolio includes stakes in projects in Australia and Peru, and Aramco’s entry as a strategic investor underscored Riyadh’s ambition to increase its presence in global gas markets. Aramco has stated publicly that LNG is a key growth area as it broadens its portfolio beyond crude oil.

Industry specialists note that established LNG projects in stable jurisdictions such as Australia remain attractive despite regulatory and environmental scrutiny. Western Australia has tightened environmental conditions in recent years, and operators face increasing pressure to curb emissions and align with national climate targets. Shell has pledged to achieve net-zero emissions by 2050, though the pathway for its gas assets continues to draw debate among investors and campaigners.

Valuation will be central to any transaction. LNG asset prices have fluctuated following the volatility triggered by Russia’s invasion of Ukraine, which drove a surge in global gas prices before easing. Buyers are likely to assess long-term contract structures, operating costs and potential capital expenditure tied to field life extensions. Financing conditions and appetite among sovereign and private investors for hydrocarbon assets will also shape negotiations.

Shell has executed several asset sales in Australia over the past decade, including the divestment of upstream interests and refining operations. Retaining exposure to LNG, however, remains integral to its earnings profile. A partial sale rather than a full exit would enable the company to recycle capital while maintaining participation in export volumes.