Oil giant Royal Dutch Shell is reportedly mulling on the possibility of selling its largest oil field in the United States. The oil company is deliberating on the move so that it can shift focus on its most profitable assets of oil and gas. According to people familiar with the matter, this is also important to address the issue of climate change. The company is under constant pressure to take steps to cut carbon emissions. The step may also include the sale of part of its 260,000 acres in the Permian Basin. The area is mostly located in Texas. Sources said the company may raise around USD 10 billion from the sale. The talks are underway with many potential buyers. The area under consideration is around 6 per cent of production output of the company last year. Oil and gas production from company-operated and non-operated rigs in Permian in 2020 was at an average of 193,000 barrels per day.
Shell is one of the largest oil companies in the world. It has been constantly under pressure from all investors to take steps to reduce fossil-fuel investments. Shell, BP Plc, and TotalEnergies have taken a pledge to reduce carbon emissions. These companies have decided to divest some oil and gas holdings and increase investment in renewables. Shale field of the United States has witnessed an increase in acquisitions and merger activity in the last year. This is because some firms are looking for opportunities to strengthen holdings while others are selling to take immediate benefit of rising prices. Oil demand is back to normal as the coronavirus pandemic ebbing. This has resulted in an increase of around 49 per cent in the US oil futures. This year it is around USD 72 per barrel, almost double their 2020 low.
Earlier this year, the oil company set the target of reducing the intensity of carbon of its products by at least 6 per cent by 2023. As per the target set by the company, it will reduce carbon intensity by 20 per cent by 2030, 45 per cent by 2035 and by 100 per cent by 2050 from 2016 levels. However, Shell faced a flack from the Dutch court which has said that the efforts taken by the company are not sufficient. The court ordered the oil company to reduce carbon emission by at least 45 per cent by 2030 from 2019 levels. The International Energy Agency (IEA) recently said that investments in new fossil fuel projects should be immediately stopped if consumers aim to achieve the UN-backed targets required for limiting global warming.