HOUSTON (Reuters) – Royal Dutch Shell on Monday sold its oil and gas production in the Permian Basin, America’s largest oil field, to ConocoPhillips for $ 9.5 billion in cash.

The deal marks a turning point for Shell, which has gone to great lengths to develop the field since purchasing permits from Chesapeake Energy nine years ago, bringing production to around 200,000 barrels per day.

The sale is the latest sign that Shell, like other European oil companies, is under pressure to sell off its oil and gas production and move towards cleaner energy production in response to growing concerns about climate change among investors and the general public.

A wave of acquisitions in the Permian Basin began in the wake of the 2020 pandemic as companies sought to cut costs. The scale of the deal with Shell is similar to Conoco’s $ 9.7 billion acquisition of Concho Resources in October, a deal that made Conoco a major player in the Permian, which straddles Texas and the New -Mexico. In April, Pioneer Natural Resources bought DoublePoint Energy for $ 6.4 billion.

With the acquisition of the Shell license, Conoco consolidates its position as a leading Permian producer alongside Pioneer, Occidental Petroleum, Exxon Mobil and Chevron.

Shell’s sale of its West Texas Permian stakes, which supplied about 6% of the company’s global oil and gas production last year, had been overdue for months. Shell recently sold its stakes in offshore oil and gas fields in Malaysia and the Philippines.

Shell has been talking about cutting emissions since 2017 and has accelerated its transition to cleaner fuels over the past two years, but not enough to satisfy many environmentalists. In addition to a target of net zero emissions by 2050, it has set a target of reducing oil production by up to 2% per year by 2030 through divestments and reduced investment in exploration and production.

Shell plans to increase its investments in renewable energy and low-carbon technologies to around 25% of its budget by 2025.

At least some of the money from asset sales goes to Shell’s power companies, including electric vehicle service points, battery companies and utilities. This week, Shell announced plans to build a biofuel plant in the Netherlands, which will be used to make cleaner aviation fuel and renewable diesel, both made from waste cooking oil and animal fat.

At least part of the impetus for the divestiture of Shell’s hydrocarbon assets came from a Dutch court ruling in May ordering the company to cut greenhouse gas emissions by 45% from by 2030 from 2019 levels, before the Covid-19 pandemic reduces demand for oil and gas. . Shell is appealing the decision.

When Shell or other oil companies sell a petrochemical field or plant, the deal does not automatically mean that global emissions will be reduced as other companies regularly resume production.

In a recent article posted on LinkedIn, Shell Managing Director Ben van Beurden wrote that if Shell stopped selling transport fuels “it wouldn’t help everyone at all” because “people would refuel their cars and trucks. delivery to other service stations ”.

Shell, like the entire oil and gas industry, recently went through a difficult period. The pandemic forced the company to cut its dividend last year. But with the recovery in oil and gas prices, the company returned to robust profitability, posting second-quarter profit of $ 5.5 billion, up from $ 638 million a year earlier.

Shell pulls out of Permian as US shale oil production resumes. The field produced 4.7 million barrels per day in August, more than 40% of total US oil production and an increase of nearly 400,000 barrels per day from January.

Stanley reed contributed reports.