* Shell earmarks up to $5 bln for further acquisitions
* Oil majors to focus on Brazil's oil, LNG after BG deal
* Shell to sell $30 bln in assets by 2018
By Ron Bousso
LONDON, Aug 7 (Reuters) - Royal Dutch Shell isconsidering investing billions in Brazil, set to become a focalpoint after the planned acquisition of BG Group, even asit prepares to sell huge chunks of its business to pay for the$70 bln deal.
Despite a broad drive to cut spending in the face ofpersistently low oil prices, Chief Executive Ben Van Beurdenremains steadfast in his plans to buy BG, which will transformShell into the world's biggest liquefied natural gas (LNG)supplier.
The company has announced plans to sell around $30 billionin assets between 2016 and 2018 to improve its balance sheet andfocus on its core deepwater oil and LNG business.
The BG deal will make Shell the largest foreign investor inBrazil's coveted deepwater oil fields.
According to several sources familiar with the company, ithas earmarked up to $5 billion for new acquisitions, mainly inBrazil where state-run oil company Petrobras isselling assets worth nearly $14 billion amid a vast corruptionscandal that has engulfed the company and thegovernment.
Shell, which expects oil prices to return to $90 a barrel bythe end of the decade, is also looking at acquisitions in otherfuture key regions including East Africa, which has hugereserves and where BG is developing several gas fields inTanzania, the sources said.
Any new spending, however, is likely to raise eyebrows amonginvestors already worried about Shell's ability to complete theBG deal as the industry faces one of its worst downturns indecades.
Shell's share price has trailed the oil and gas sector index since the deal was announced in April. Chief FinancialOfficer, Simon Henry, acknowledged in April that while Shellwould look at assets, it did not have "a lot of cash left to bedoing much more" on acquisitions.
Van Beurden says spending will be selective.
"We will be doing quite a bit of portfolio high-grading onthe back of the BG deal and it doesn't necessarily mean gettingout of stuff. It may also mean selectively deepening in areaswhere we can continue to build on our strengths," van Beurdentold reporters last week.
"You always look at whether a portfolio is deepeningpositions in areas or whether it is disposing of positions thatare due for restructuring or where we don't see the strategicfit any more. That hasn't changed on the back of the BG deal."
A Shell spokesman said the company does not comment onspecific portfolio activity.
PETROBRAS
Along with international peers Exxon Mobil, Total and BP among others, Shell has shown interestin Petrobras' producing oil fields as well as operating rightsin Brazil's coveted offshore "subsalt" basin, according toindustry sources.
Petrobras brought in Bank of America Merrill Lynch in June to help manage its divestment plan.
Brazil's huge deepwater oil reserves are set to become a keysource for meeting growing global demand over the next fewdecades.
Shell and BG's combined oil production in Brazil is expectedto reach 550,000 barrels per day by the end of the decade, fromaround 200,000 bpd at present, and will account for around 20percent of the company's global production.
In the face of its share price slump, Shell used lastmonth's quarterly results to outline a 20 percent cut inspending this year, or capex, to $30 billion and billions ofdollars in cost savings to boost the balance sheet.
It plans to increase borrowing levels and has indicated itwill significantly reduce planned 2016 capex for the combinedgroup after completion of the deal, expected early next year. (Editing by Susan Fenton)