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Royal Dutch Shell sells its Permian Basin oil holdings to ConocoPhillips for $9.5 billion.

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HOUSTON — Royal Dutch Shell on Monday sold its oil and gas production in the Perm basin, the largest US oil field, to ConocoPhillips for $9.5 billion in cash.

The deal marks a turning point for Shell, which has made significant efforts to develop the field since it bought acreage from Chesapeake Energy nine years ago and expanded production to about 200,000 barrels per day.

The sale is the latest sign that Shell, like other European oil companies, is under pressure to sell off oil and gas production and switch to producing cleaner energy 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 Shell deal is comparable to Conoco’s $9.7 billion acquisition of Concho Resources in October, a deal that made Conoco a major player in the Permian, which spans Texas and New Mexico. In April, Pioneer Natural Resources bought DoublePoint Energy for $6.4 billion.

With the acquisition of Shell’s acreage, Conoco consolidates its position as a top producer in Perm, along with Pioneer, Occidental Petroleum, Exxon Mobil and Chevron.

Shell’s sale of its West Texas Perm interests, which last year accounted for an estimated 6 percent of the company’s global oil and gas production, had been expected for months. Shell recently sold its interest in offshore oil and gas fields in Malaysia and the Philippines.

Shell has been talking about cutting emissions since 2017 and has accelerated the move to cleaner fuels over the past two years, although not enough to please many environmentalists. In addition to targeting net-zero emissions by 2050, it has set a target of reducing oil production by 2 percent per year by 2030 through divestments and lower investment in exploration and production.

Shell plans to increase its investment in renewables and low-carbon technologies to around 25 percent of its budget by 2025.

At least some of the money from the asset sale will go to Shell’s energy companies, including plug-in points for electric vehicles, battery companies and utilities. Shell announced plans this week to build a biofuel plant in the Netherlands, which could produce cleaner jet fuel and renewable diesel, both made from waste cooking oil and animal fat.

At least part of the impetus for Shell’s divestment of hydrocarbon assets came from a decision by a Dutch court in May that ordered the company to cut greenhouse gas emissions by 45 percent by 2030 compared to 2019 levels, before the end of the year. Covid-19 pandemic lowered oil and gas demand. Shell is appealing the ruling.

When Shell or other oil companies sell a field or petrochemical plant, the transaction does not automatically mean a reduction in global emissions, as other companies routinely pick up production.

In a recent article Published on LinkedIn, Shell chief executive Ben van Beurden wrote that if Shell stopped selling transportation fuels “it wouldn’t help the world” because “people would refuel their cars and vans at other gas stations.”

Shell, like the entire oil and gas industry, has been going through a rough time of late. The pandemic forced the company to cut its dividend last year. But with oil and natural gas prices recovering, the company has returned to robust profitability and reported profits of $5.5 billion in the second quarter, up from $638 million a year earlier.

Shell pulls out of the Permian as US shale oil production recovers. The field produced 4.7 million barrels per day in August — more than 40 percent of total U.S. oil production and an increase of nearly 400,000 barrels per day since January.

Stanley Reed reporting contributed.

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