The Statfjord field straddles the border between the Norwegian and British sectors in the Tampen area and Shell's share in the production of the field was 13,300 b/d of oil equivalent last year.
The acquisition will provide Centrica with an additional 172 bcf equivalent of gas and oil reserves, and an incremental 70 million cubic feet/day of gas and oil production in 2010, the company said.
"The increased equity share provides Centrica with access to long term sources of gas production at attractive rates of return, providing a good strategic fit with the existing portfolio," Centrica said in a statement.
Centrica said the deal increases its level of gas reserves to feed its UK residential and business supplier British Gas.
Centrica's shares rose by up to 1.7%, their highest in three years, in early trade Friday but were trading 0.26% higher at GBP341.90 ($534.64) by 11:29 GMT.
The company has been trying for some years to grow its own upstream gas production to better match the scale of its gas market sales and reduce its exposure to more volatile wholesale gas prices.
Last month Centrica struck a $357 million deal to acquire gas wells in western Canada from Suncor Energy. It acquired the UK's gas-focused Venture Production and also has LNG interests in Nigeria, in addition to its longstanding Morecambe Bay gas fields.
NON-CORE FOR SHELL
Under the agreement, Centrica will acquire Shell's 11.04% interest in production license 037 and its shares in the underlying producing fields, including a 9.44% in the Statfjord field.
Centrica currently owns a 9.69% interest in the Statfjord field and this deal will raise its overall interest to 19.13%. The deal also gives Centrica an 11.04% holding in Statfjord Nord, 5.52% in Statfjord East and 6.07% in Sygna.
Gas produced from these fields is not contracted and directly linked to the UK market, Centrica said.
Indeed, Shell and Centrica have been routing their share of the gas from Statfjord through the Tampen Link and the FLAGS pipeline into St Fergus in Scotland.
Centrica said additional field development costs of about $157 million will be required over the next three years to maximize the recoverable reserves from these fields.
License partners in PL037 include operator Statoil (44.34%), ExxonMobil (21.37%), and ConocoPhillips (15.17%). Additional partners in the satellite fields include Idemitsu, Total and RWE DEA.
Shell said the transaction is part of its plan to sell $7-8 billion of its assets in 2010-11 to focus on its major growth projects.
"Shell's growth strategy for Norway is unchanged...But we also continue to manage our portfolio to ensure the strategic fit of our assets and maximize shareholder value," said David Loughman, managing director of Norske Shell, in a statement.
"We are actively exploring in the Voring Basin as well as progressing existing discoveries," Loughman said.
Shell's other production holdings in Norway include the Draugen and Ormen Lange fields, where Shell is the operator, and equity holdings in the Troll, Kvitebjorn and Gjoa fields.
China Chemical Weekly: http://news.chemnet.com/en/detail-1411716.html
