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Shell reviews New Zealand business

Dutch supermajor forced to step back already from major North American operations this year.

By Daniel J. Graeber

WELLINGTON, New Zealand, Dec. 10 (UPI) -- Royal Dutch Shell said it was reviewing its portfolio in New Zealand as it works to streamline operations in a weakened crude oil market.

"In keeping with company's strategy to become a simpler, more profitable and resilient company, Shell announced that its interests in New Zealand are under review," the company said in a statement.

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Shell's operations in New Zealand account for about half the total natural gas production in the country and a "significant" portion of its light oil production. As recently as last year, the company said it was moving forward with preliminary drilling operations in the Great South Basin off the New Zealand coast.

Rob Jager, chairman of the company's New Zealand subsidiary, said the company's assets are an important part of the country's energy mix, but represent only a small portion of Shell's global footprint.

"We are very conscious of the uncertainty this creates for local staff and New Zealand staff abroad, and we will commit to moving quickly through this review process and to keeping people informed on the outcome of the review," he said in a statement.

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According to Shell, the New Zealand oil and gas sector contributed about $2.5 billion to the nation's gross domestic product.

Oil by itself is the fourth-largest export for New Zealand, bringing in around $700 million each year in royalties and taxes. The government said there are around 149 million barrels of oil reserves remaining in fields already in production.

Shell in October said it would no longer continue with the construction of its Carmon Creek project in Alberta, Canada, and take a $2 billion write down for the loss. In September, the company said a combination of weak market conditions and a lack of exploration success meant it was time to dismantle its offshore program in Alaska.

On its New Zealand operations, the company said "choices have to be made to streamline the global portfolio given the current environment."

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