BP, the British oil major, is in talks with Italian oil company Eni to sell it its oil and gas assets in Algeria, sources said, quoted by Reuters. The sell-out would come as the British major increase efforts to refocus its business into an ESG agenda.
Firstly, such effort comes after the company pledged to cut back its oil and gas portfolio to keep only the assets most likely to be profitable; specially after a transition to cleaner energy will keep the company attractive to investment.
Secondly, according to Reuters, BP and Eni were already in talks to forge a joint venture to run together their operations in Angola; such talks would include the sale of BP’s assets in Algeria to Eni.
Thirdly, sources confirmed to Reuters that the companies are exploring an outright sale, as an option for BP to get stakes in Eni’s assets around the world; specifically in the companies liquified natural gas development in Mozambique.
Moreover, companies have also flirted with the idea of creating a joint venture in the North African country similar to the Angolan model, the sources said. However, according to the news agency, both companies declined to comment.
Also recommended for you: Norwegian AVG Group Sarl advances climate change investment in North America. Click here to read.
BP seeks for a fair move along with Eni
In addition, such deal would help BP to dispose of the Algerian portfolio, after the assets reported a failure to be sold, since 2019. BP has a 45,89% stake in the In Amenas natural gas plant. In fact, it also holds 33% stake in the In Salah gas plant.
Furthermore, according to Reuters, assets in the country are less profitable and harder to sell, as regulations mandate that companies earn fixed royalties based on the output from fields, in what are known as production sharing agreements (PSAs).
Such scheme would make the assets less profitable, harder to sell, and harder to produce. In fact, BP has already tried to sell the assets with no success. On the other hand, Eni is the biggest foreign oil and gas producer in Africa with strategic interests in Libya and Egypt, acquiring BP’s assets would turn Algeria into a hub.
Consequently, a joint venture with Eni, or a sale to the company, in exchange with stake in other assets would be a fair move for BP.
Finally, BP’s net share of production in Algeria in 2020 was 141 million cubic feet (mcf) of gas per day and 6,000 barrels of oil per day, as Reuters reports.