XRG to buy Shell stake in Australian gas project for $1.45 billion
Key Facts
ADNOC subsidiary XRG has agreed to buy Shell’s stake in Australia’s North West Shelf LNG project for $1.45 billion, giving it its first asset in the country, Reuters reported. Shell said its 16.67% stake includes interests in upstream production, pipelines and processing and liquefaction infrastructure, as well as interests and agreements linked to the project and supply. Signing the agreement does not transfer ownership immediately; the company expects the deal to complete in 2027, after conditions including regulatory approvals are met. The transaction’s economic effective date is January 1, 2026, Shell said, although actual closing is not expected before next year. The deal places Shell’s stake in a mature project among XRG’s first Australian investments, as the project prepares to expand its role in processing gas from third parties.
Shell did not disclose the value of the additional payment tied to completion of a specified milestone, and said the base deal value is subject to customary adjustments, as well as a payment conditional on that milestone being met. The agreement also requires the buyers to assume decommissioning obligations at the end of the facilities’ lives and provide assurances related to those obligations. Shell’s integrated gas president said the sale “realizes value from a mature, non-operated asset and supports Shell’s strategy by focusing investment on advantaged integrated gas positions.” The company also linked the deal to the project’s future transition to a third-party gas processing, fee-based model. This means the agreement covers, alongside the stake price, financial arrangements and operational and environmental obligations tied to what happens to the facilities at the end of their lives.
The North West Shelf project is in Western Australia. It is an LNG and domestic gas development comprising interconnected joint ventures between Woodside, Chevron, BP, Shell, MIMI and CNOOC. Woodside says the project has been producing energy for 40 years, while Shell says declining output from the original fields has created available capacity at the Karratha Gas Plant. The project is moving toward a mix of gas production and processing gas supplied by other parties, which explains the importance of facility-use fees in its future operating model. Woodside said the Karratha plant has already begun processing gas from other resource owners for facility-use fees. In this context, available capacity gives the project a role beyond receiving output from its original fields, alongside the shift in the business model Shell described when announcing the sale.
The facility faces operational changes as output from older fields declines; Reuters said Woodside plans to close a second production train at the North West Shelf facility during 2027. This comes as the project seeks gas from other parties, amid lower supply from its original fields and available capacity at the Karratha plant. The Australian government gave the project extension final approval on September 12, 2025, imposing 48 conditions to protect the Murujuga rock art. The conditions include cutting some gas emissions from current levels, in some cases by 60% by 2030, with further reductions thereafter. These environmental conditions set the framework for the project’s extension and operations, while the deal itself remains subject to the necessary approvals before its expected completion in 2027.
Shell said it expects LNG sales to grow at an annual rate of 4% to 5% through 2030, while maintaining a presence in Australia through QGC, Prelude and Crux, and its joint ventures Arrow Energy and Gorgon. The strategy places the sale of its North West Shelf stake within a reallocation of investment toward integrated gas positions the company described as advantaged, while it retains other activities in the country. In the Australian economy, annual inflation was 4.3% in the 12 months to September 2026, compared with 4.0% through August, according to the Australian Bureau of Statistics. The weighted average of the eight capital cities’ index was 104.34 in September, which is an index figure, not an inflation rate. The bureau is scheduled to release international trade in goods data for September on November 5, 2026, while the next date related to the deal remains its expected completion in 2027.