|CEOs Claudio Descalzi (ENI); Emilio Lozoya (Pemex); Bob Dudley (BP),|
Amin H. Nasser (Saudi Aramco), Patrick Pouyanne (Total)
After leading the discovery of the Zohr field, Italy’s Eni has signaled its intention to reduce its stake in the field to about 50%, starting with the sale of a 10% stake to BP for $375 million.
Billed as the largest natural gas discovery in the Mediterranean in the last decade, the Zohr offshore field near Egypt has attracted intense interest from companies hoping to make the most out of the region’s new-found energy potential. According to earlier reports, the “super giant” field could be home to an estimated 30 trillion cubic feet of natural gas.
However, Eni appears ready to reduce its exposure to the effort, telling media outlets that it feels it can manage the project with a smaller stake.
“We believe we can operate the field with 50 percent, that’s my objective,” Chief Executive Claudio Descalzi said this week, according to Reuters.
As a part of the deal, BP reserves the right to purchase an additional five percent and will cover about $150 million in past costs to Eni.
For BP, the deal will allow the company to expand its Egyptian footprint, including further supplying the local market.
“BP has now been in Egypt for over 50 years and we continue to see opportunities to further develop our extensive activities here,” said Bob Dudley, BP group chief executive, according to local media reports. “Beyond Zohr, the first phase of our major West Nile Delta project is on schedule to begin production next year and the fast-tracked development of the Atoll gas field is expected to come on stream in 2018.
For Egypt, the successful development of the field would put them on track to join in on a burgeoning energy production push in the Eastern Mediterranean, previously led by Israel and, to some degree, Cyprus. Further, the field would play a significant role in supporting Cairo’s efforts to increase domestic energy production to meet surging domestic demand.
In recent years, Egypt has faced substantial challenges to meeting its energy needs as political and financial instability have threatened local production and made it difficult to afford costly imports without accruing large foreign debts. While small discoveries have provided Cairo with some momentum towards attracting the interest and investment necessary to move towards its energy goals, a discovery of this stature could be the key to overcoming any doubt among potential investors.