Carlyle, Cairn Energy-backed firm among bidders for Shell’s Egyptian assets

Buyout firm Carlyle and a consortium backed by Cairn Energy are among the bidders for Royal Dutch Shell’s onshore Egyptian oil and gas assets, two sources with knowledge of the matter told Reuters.

Bids for the assets are now expected to be sharply lower than initial estimates of up to $1 billion due to a weaker outlook for global oil and gas prices, said the sources, declining to be named as the matter is not public.

Shell launched a process at the end of November to sell its onshore upstream assets in the Western Desert as it focuses on expanding its Egyptian offshore gas exploration.

The process, which was expected to be completed in May, was slowed by the coronavirus pandemic, which limited travel and led to a collapse in oil and gas prices.

As a result, various parties are at different stages of negotiations. Some Asian investors are at a more advance stage, while talks with companies including Dubai-based Dragon Oil are moving at a slower pace, one of the sources said.

Shell hired investment bank Citigroup last year to run the sale, which is now expected to close by September, one of the sources said.

Shell, Citi, Carlyle and Cairn declined to comment. Dragon Oil did not immediately respond to a request for comment.

The Western Desert portfolio includes stakes in 19 oil and gas leases of which Shell’s working interest included production of around 100,000 barrels of oil equivalent per day in 2018.

Egypt’s oil and gas sector has seen a rapid expansion in recent years after the discovery of vast offshore gas reserves that has drawn major investments from international companies including Eni and BP.

At the same time, Egypt’s aging oil and gas assets have changed hands. BP in 2018 sold its decades-old stake in the Gulf of Suez Petroleum Company (GUPCO) to Dubai-based Dragon Oil Ltd.