Shell and partners sell Maui pipeline for $335m

Shell New Zealand-controlled Maui Development has sold the Maui natural gas pipeline for $335 million to funds managed by First State Investments, which recently bought Vector's gas distribution and transmission assets.

The pipeline holding company, which counts OMV New Zealand and Todd Energy as minority partners, has been looking for a buyer for some time, and the sale is separate from Royal Dutch Shell's review of its local businesses, it said in a statement. The pipeline transports gas from the Maui field, and accounts for about 78 percent of New Zealand's natural gas production.

"The Maui natural gas pipeline has been operating successfully for nearly four decades, and whilst built exclusively for the Maui natural gas field, it is now a key asset in transporting gas from many gas fields in Taranaki," Maui Development and Shell NZ chair Rob Jager said.

"We are pleased that such an important asset of this country's energy infrastructure will be managed by First State Investments, a leading global infrastructure asset manager with strong expertise in this area, and having recently acquired the Vector transmission gas business which has also been the technical operator of the Maui pipeline," he said.

This month Vector shareholders agreed to sell its gas transmission and distribution assets outside Auckland to First State for $952.2 million after the business attracted unsolicited offers, prompting the lines company to consider putting it up for sale.

Vector also signed a memorandum of understanding with the fund manager "to consider opportunities to co-invest in regulated and unregulated energy infrastructure, both in New Zealand and offshore, and to cooperate operationally on gas distribution activities."

The Maui pipeline deal is subject to certain regulatory approvals, and is expected to be completed in the middle of next year. OMV owns about 10 percent of the pipeline, and Todd owns about 6.3 percent.

The First State-managed infrastructure funds buying the pipeline are the Global Diversified Infrastructure Fund and the Colonial First State Active Infrastructure Income Fund. First State is known in Australia as Colonial First State Global Asset Management.

Shell stressed the sale was "under consideration for a long time" and wasn't part of the review announced earlier this month that might see it quit New Zealand. The oil company has had local operations for more than a century and supplies about 70 percent of the country's natural gas.

Other than the 84 percent Maui pipeline stake, Shell's New Zealand assets include 48 percent of the offshore Pohokura gas field, and 50 percent of the onshore Kapuni field, all of which it manages in partnerships, including its 50/50 joint venture with Todd Corp, Shell Todd Oil Services.

Shell NZ sold out of its transport fuels distribution business in 2010, with those assets re-emerging as NZX-listed Z Energy in 2013.

(BusinessDesk)