BP and Eni have struck a formal deal to form a joint venture in Angola, creating the country's largest oil and gas producer with an output exceeding 200,000 barrels of oil equivalent per day plus resources of 2 billion boe.
The UK supermajor has been looking to exit Angola for years, according to multiple well-placed sources, but could not find buyers for its key assets — blocks 18 and 31 — during the years of low oil prices after 2014.
In May, before the current oil price boom, BP instead agreed to work with the Italian major for whom Angola is a core country and where it has been investing billions into a multitude of developments in block 15/06.
The joint venture is called Azule Energy and will be equally owned by the two players, and is expected to be Angola’s largest producer, holding stakes in 16 licences and a key stake in the Angola liquefied natural gas plant at Soyo.
Eni’s stake in Solenova, a solar company jointly held with Sonangol, will also be transferred to Azule.
Azule has a pipeline of new projects set to start up over the next few years, including the Agogo scheme in Block 15/06 and Palas-Astraea-Juno (PAJ) in Block 31, both of which will be tapped via floating production, storage and offloading vessels.
Also in the joint venture’s portfolio is the country’s first non-associated gas project which is being developed by the New Gas Consortium in which the two companies are partners.
BP and Eni said they believe “combining their efforts with a long-term perspective will create more efficient operations and offer the potential for increased investment, job creation and growth in Angola”.
As well as its upstream focus, the partners pointed out that Azule will also position itself “to capture new opportunities from the energy transition with the growing role of gas and renewables in its portfolio”.
BP chief executive Bernard Looney said “this innovative new venture underscores and enables our continued commitment to the country”, adding that Eni “is a valued partner to be working with in the region”.
“Ultimately”, he added, “Azule will be able to drive efficiencies and realise new opportunities across an expanded and truly exciting portfolio”.
Eni chief executive Claudio Descalzi said the creation of the joint venture “is a further step in advancing our strategic approach to accelerate growth through focused lean and financially independent companies”.
He claimed that the business combination “will have one of the largest portfolios of production, development and exploration opportunities in Sub-Saharan Africa”.
The companies’ said health, safety and environmental performance, project delivery and production efficiency will be priority areas for the new venture, which will maintain access to technologies and best practices through “focused areas of technical support” from both parties.
BP and Eni have worked closely with Angola’s government on the creation of Azule and expect the transaction to close in the second half of 2022.
Once set up, Azule will be equity accounted by BP and Eni, with hydrocarbon production and greenhouse gas emission continuing to be reported on an equity-share basis.
Currently, Eni operates offshore blocks 15/06, 1/14 and 28 and onshore blocks Cabinda North and Cabinda Centro.
In addition, it will soon become the designated operator of the New Gas Consortium.
The Italian major also has non-operating interest in blocks 0, 3/05, 3/05A, 14, 14 K/A-IMI, 15 and is a shareholder in Angola LNG.
BP, meanwhile, operates blocks 18 and 31 and is a partner in blocks 15, 17, 20 and 29.
It also holds non-operated interests in the New Gas Consortium and Angola LNG.
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