German utility RWE plans Egypt assets sale
London, November 25, 2011
German utility RWE has earmarked oil and gas assets in Egypt for sale in a bid to shore up its finances as Germany moves to exit nuclear energy, the Financial Times reported on Friday.
RWE-DEA, the company's oil and gas exploration unit, has identified Egyptian assets as the "most likely contenders" to raise cash without affecting RWE-DEA's otherwise strong results, the FT reported, citing people briefed on the matter.
RWE is seeking to divest assets to generate 11 billion euros ($14.65 billion). The company said in August it would spare its oil and gas unit Dea an outright sale but added that the business may part with some licenses.
RWE has been hit by the German government's decision -- made in the wake of Japan's Fukushima nuclear disaster -- to phase out nuclear power completely by 2022, meaning that RWE will have to produce electricity at a higher cost while wholesale prices could falter due to slow economic growth, stagnating populations and rising energy efficiency.
Bankers expect the Egyptian assets to fetch up to 2 billion euros, the FT reported.
Concessions that had not yet been developed were the most likely candidates for sale as they would save Dea investment costs, while also allowing it to continue to reap the profits from fully developed oil and gas fields in Egypt, the report said.
It was possible that Dea's North Sea assets -- which it has been increasing -- could be sold to regional rivals in oil and gas exploration and production, the report said, citing the sources.
RWE was not immediately available for comment on the report.-Reuters