Eni to sell 30% stake in Egyp­tian field to Ros­neft

Kuwait Times - - BUSINESS -

Ital­ian en­ergy com­pany Eni has agreed to sell a 30 per­cent stake in a gi­ant Egyp­tian off­shore gas field to Rus­sia’s Ros­neft for $1.575 bil­lion, press­ing ahead with as­set sales to fund in­vest­ment amid weak oil prices. Eni, which cur­rently owns 90 per­cent of the Shorouk con­ces­sion con­tain­ing the gi­ant Zohr gas field, said Ros­neft would pay $1.125 bil­lion cash for the stake and would re­im­burse in­vest­ments al­ready car­ried out by Eni for around $450 mil­lion.

Ros­neft also has an op­tion to buy a fur­ther 5 per­cent stake. Sell­ing down stakes in oil and gas fields it op­er­ates is part of Eni’s so-called “dual ex­plo­ration” strat­egy to raise cash to fund fu­ture de­vel­op­ment and sup­port div­i­dends. In the last four years, Eni has raised about $6.3 bil­lion in this way.

Eni, whose cash flow fell 19 per­cent in the third quar­ter due to low oil prices, has pledged to sell 5 bil­lion eu­ros of as­sets in the next two years. Zohr, dis­cov­ered by Eni in 2015, is the big­gest gas field ever found in the Mediter­ranean with an es­ti­mated 850 bil­lion cu­bic me­tres of gas in place.

The ap­proval process for de­vel­op­ment of the field was com­pleted in Fe­bru­ary and first gas is ex­pected by the end of 2017. In Novem­ber, Eni Chief Ex­ec­u­tive Clau­dio Descalzi said he wanted to cut the firm’s stake in Zohr to 50 per­cent. Back then the state-con­trolled ma­jor sold a 10 per­cent stake in Zohr to BP for a to­tal of $525 mil­lion, grant­ing BP an op­tion to buy an­other 5 per­cent be­fore the end of the year. BP holds 19.75 per­cent of Ros­neft and the two com­pa­nies have tra­di­tion­ally had close re­la­tions.

Eni, which has part­ner­ships with BP in Egypt, signed a joint ven­ture agree­ment with Ros­neft back in 2012 to de­velop off­shore projects in Rus­sia in ar­eas like the Bar­ents and Black Seas. The Rus­sian en­ergy con­glom­er­ate, led by Igor Sechin, said ear­lier this month its board planned to dis­cuss buy­ing a stake of up to 35 per­cent in Shorouk.

The deal marks an­other step in Ros­neft’s global ex­pan­sion drive af­ter it bought into In­dia’s Es­sar Group in Oc­to­ber. —Reuters

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