Italian energy company Eni will sell a 30% stake in its giant Egyptian offshore gas field Zohr to Russia’s Rosneft for $1.575 billion, pressing ahead with asset sales to fund investments and offset weak oil prices.
Eni, which owns 90% of the Shorouk concession containing Zohr, said on Dec. 12 that Rosneft would pay $1.125 billion and reimburse about $450 million for investments already carried out by Eni.
The deal comes less than a month after Eni’s sale of a 10% stake in Zohr to BP at the same implied price, bringing overall proceeds to about $2.1 billion.
Eni, whose cash flow fell 19% in the third quarter due to low oil prices, pledged at the start of the year to sell $7.43 billion worth of assets to 2019.
“This is a great success for Eni to receive $2.1 billion for a year’s work and have major partners to share the risk and capex,” Bernstein oil analyst Oswald Clint said.
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. In the last four years, Eni has raised about $6.3 billion in this way.
Zohr, discovered by Eni in 2015, is the biggest gas field in the Mediterranean with an estimated 850 Bcm (30 Tcf).
The approval process for its development was completed in February and gas should be produced by year-end 2017.
In November Eni CEO Claudio Descalzi said he wanted to cut Eni’s stake in Zohr to 50%.
Rosneft, which like BP, has an option to buy a further 5% stake, said in a statement that its total investment in the project would reach $4.5 billion in the next four years.
“We suspect BP and Rosneft will take the additional 5% next year given the high return of this field,” Bernstein’s Clint said. Rosneft did not mention the option.
—Reuters