BP and Eni have announced a merger of their Angola oil and gas operations, creating a firm called Azule Energy.
Azule Energy holds stakes in 16 licenses and the Angola LNG joint venture, which will be the biggest producer in Angola.
The company will also acquire Eni’s stake in Solenova, a solar company jointly owned with Sonangol.
The two energy groups are close to raising around $2.5 billion in financing to help fund the joint venture, and they are also not far from another agreement for Eni to buy stakes in Algerian gas plants.
Last year, both companies announced plans to acquire each other’s Angolan businesses. Their combined oil and gas production in Angola is expected to reach around 200,000 barrels per day.
This merger is part of the companies’ plan to transform their oil and gas businesses through the adoption of renewables and low-carbon energy in the coming decades. It will also enable them to reduce debt.
BP has also agreed to sell its stake in two major gas developments in Algeria – In Salah Gas and In Amenas – to Eni within the framework of a separate agreement. However, the value of such a deal isn’t clear.
There has been a struggle between the two sides to balance the value of their Angolan assets due to the fact that Eni’s operations and oil and gas reserves are larger and hold a greater value than BP’s.
BP and Eni issued statements on Friday saying their gross assets in the deal at the end of 2021 will be worth $6.8 billion and $7.3 billion, respectively.
As a result of the ownership change at two gas plants in the south of Algeria, Eni will be able to expand Algeria’s energy infrastructure and export gas to southern Europe via pipelines.
Following Russia’s invasion of Ukraine, Italy is looking to ramp up gas imports from Algeria to help reduce its dependence on flows from Gazprom. For that, Algeria’s upstream production of gas must increase.
Eni, which holds long-term gas contracts with Sonatrach, has long-standing ties with Algeria. It signed a series of agreements aimed at increasing production last year.
The country has one of Europe’s largest gas transport networks, allowing it to serve as a future port of entry for gas – and zero-emission hydrogen – produced in North Africa and elsewhere.
Bernard Looney, bp’s chief executive, said: “Angola has long been important for bp operations and this innovative new venture underscores and enables our continued commitment to the country. Eni is a valued partner to be working with in the region. Azule Energy draws on our combined strengths and skills and, more importantly, is anchored in our shared values and beliefs about what the future of energy should be. Ultimately Azule Energy will be able to drive efficiencies and realize new opportunities across an expanded and truly exciting portfolio.”
Claudio Descalzi, CEO of Eni, said: “The creation of Azule Energy is a further step in advancing our strategic approach to accelerate growth through focused lean and financially independent companies. Combining two world-class businesses into one stronger team, Azule Energy will leverage synergies and high-quality assets, boosting activities in Angola and will have one of the largest portfolios of production, development and exploration opportunities in Sub-Saharan Africa. bp shares our values and our approach to just transition and we are very pleased to be partners in this initiative.”
