Shell has agreed to sell its wholly owned subsidiary BG Cyprus to MOL Group for up to $720m (£534.86m), subject to adjustments and milestone-related contingent payments.
The planned transaction will see MOL Group acquire Shell’s 35% non-operated interest in Cyprus Offshore Block 12, which contains the Aphrodite gas field in the eastern Mediterranean.
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Both companies expect to complete the sale in early 2027, pending regulatory approvals and standard closing conditions.
Block 12 is situated approximately 170km south-east of Cyprus within the country’s exclusive economic zone.
The Aphrodite gas field was discovered in 2011 and has been further appraised through several drilling campaigns. Estimates put contingent resources at around 104 billion cubic metres (bcm), or 632 million barrels of oil equivalent (mboe), of gas and eight million barrels (mbbl) of condensate.
Production from the Aphrodite field is intended for sale to the Egyptian Natural Gas Holding Company, according to the current development strategy.
BG Cyprus’ joint venture (JV) partners in the project include Chevron Cyprus, which has an operating stake of 35%, and NewMed Energy, which holds 30%.
In 2016, Shell bought BG Group for $70bn and absorbed its BG Cyprus subsidiary. This move handed Shell the interest in the Aphrodite gas field that BG Cyprus had secured in the previous year.
After the latest transaction, MOL Group will assume Shell’s interests and corresponding obligations.
Shell said the decision to divest follows its work with the Government of Cyprus and its JV partners to advance the Aphrodite project to its current stage. The company stated that the sale would allow it to realise the value created thus far, while the remaining partners advance towards a final investment decision (FID).
Shell integrated gas president Cederic Cremers said: “We believe Aphrodite remains an attractive development opportunity and will play an important role in supporting regional energy needs.
“Our decision to exit is driven by disciplined capital allocation and portfolio choices, as we focus on opportunities that strengthen our integrated LNG [liquefied natural gas] value chain.”
Shell stated that it maintains a significant presence in Egypt and considers the country important to its operations.
The Aphrodite field development plan includes drilling four production wells and construction of a floating production unit to be located in the eastern Mediterranean. It will also involve the installation of a subsea pipeline approximately 250km in length to connect the field to Egypt’s gas transmission network.
The Government of Cyprus and project co-venturers approved a development and production plan for the field in 2025, although an FID has not yet been taken.
Project partners currently anticipate making this decision in 2027, with first gas set to be produced in 2031.
According to MOL Group, the acquisition represents its largest upstream growth opportunity since it purchased a 9.57% stake in the ACG field in Azerbaijan in 2019.
MOL Group chairman and CEO Zsolt Hernádi said: “Amid the current geopolitical uncertainties, diversifying and expanding with high-quality assets and reputable international partners are key to maintain our resilience and competitiveness. The agreement we made strengthens MOL Group and the entire central and eastern European region.
“This step is also in line with our exploration and production strategy that focuses on strengthening our international portfolio while building strategic partnerships with highly reputable international companies.
“Our entry into Cyprus and our expansion within the EU represent important milestones for us as this large-scale, long-life offshore gas development asset supports our long-term production targets and will enable us to achieve significant growth in our reserve base.”
