Italian energy firm Eni (NYSE: E) signed a deal on Nov. 14 to explore an area off the southern coast of Oman for oil and gas and inked an agreement for Qatar Petroleum to take a stake in the block.
Under the exploration and production sharing agreement (EPSA), Eni will be operator of Block 52 with an initial 85% stake, with the rest held by a subsidiary of state-owned Oman Oil Co. SAOC.
But Eni said it had also signed an agreement to cede 30% of the block to Qatar Petroleum, a move that will reduce the Italian firm’s stake to 55% once completed.
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 development and support dividends.
“The signing of the Block 52 EPSA represents an important milestone in Eni’s strategy to reinforce its presence in the Middle East region,” Eni CEO Claudio Descalzi said.
Descalzi welcomed the deal with Qatar Petroleum given its position as a top LNG operator.
Eni, the biggest foreign oil producer in Africa, is seeking to develop its LNG business in an effort to find markets for its bumper gas discoveries in Mozambique and Egypt.
Block 52, located in water depths ranging from 10 m (32 ft) to over 2,000 m (6561 ft), is largely underexplored, covering more than 90,000 sq km (34,749 sq miles), Qatar Petroleum said in a separate statement.
Qatar Petroleum is seeking to expand overseas through joint ventures with international oil firms to maintain its dominance over rivals in the U.S. and Australia.
It will start drilling with ExxonMobil Corp. (NYSE: XOM) for oil and gas off the southern coast of Cyprus in 2018.