Shell Said to Seek Sale of Stake in $1.4 Billion Wind Farm

(Bloomberg) -- Royal Dutch Shell Plc and its partners Eneco Holdings NV and Mitsubishi Corp. are seeking to sell a stake in two Dutch offshore wind-farm projects that may cost $1.4 billion to develop, two people familiar with the plan said.

The companies are looking to reduce their ownership in the Borssele III and IV wind farms by as much as 45 percent, according to the people who asked not to be named because they aren't authorized to speak about it publicly. The fourth partner, infrastructure contractor Van Oord NV, is keeping its share of the project.

The move would allow the companies to scale back financial exposure to the wind farms and redeploy the cash in new projects with the potential for higher returns. Shell has said only that it is trying to draw in additional investors, refusing to detail what that may entail. Its strategy is to focus on developing the early stages of gigantic wind farms and avoid holding the assets as long term operations, which offers a steady but slower payback. 

“This is part of a planned assessment by the consortium on how to best fund the project and future offshore wind projects for the long term,” Eneco said in a statement Monday, which Shell said it and the other partners endorsed. “Offshore wind projects require substantial capital. We are in the energy transition for the long-haul.”

The project marked Shell's first foray into large-scale offshore wind developments. Shell and its partners won a contract to build the facilities 22 kilometers (14 miles) off the port city of Zeeland in the Netherlands last December, beating 26 other bidders in a government auction for power-generation capacity. 

With a combined capacity of 700 megawatts, the units may require investment of $1.4 billion by the time they are complete in 2020, according to estimates from Bloomberg New Energy Finance. By those calculations, a 45 percent stake may be worth roughly $630 million.

None of the companies have disclosed their specific stakes in the project or their outlook for the total investment required. One of the people familiar with the deal said Shell has 50 percent, Eneco 30 percent, and both Van Oord and Mitsubishi each have 10 percent.

The stake may be split and sold to multiple buyers, the people said. The companies are currently running the sale process and expect to wrap it up before the end of the year. One new equity partner has already been selected, according to one of the people.

Van Oord confirmed that it is not planning to reduce their stake. Spokesman Robert de Bruin said by email that its “strategy is indeed to support the project as an investor during the construction phase, and, as a consequence, Van Oord is not considering to sell before project completion.”

--With assistance from Jessica Shankleman

To contact the reporter on this story: Anna Hirtenstein in London at ahirtenstein@bloomberg.net.

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Amanda Jordan