With dropping oil prices and a global energy transition movement, energy companies around the world are cutting back their oil and gas portfolios to the minimum, keeping only the assets that are most likely to be profitable while reinvesting capital in other forms of clean energy as uncertainty mounts over future demand for fossil fuel.
According to three sources, BP and Eni are in early-stage talks over the future of their oil and gas assets in Algeria as the two groups increase efforts to refocus their businesses to tackle falling margins, rising debt and climate pressures. BP and Eni have set out plans to transform their businesses in the coming decades, shifting away from oil and gas to renewable energy, power markets and low-carbon businesses.
The two groups are exploring an outright sale as well as an option for BP to receive stakes in Eni assets around the world, possibly in its flagship liquefied natural gas development in Mozambique, one of the sources said.
The sources, asking not to be named, said BP and Eni are in early-stage talks for the Italian group to take over BP’s assets in Algeria.
Being a stakeholder in one of the companies means that international groups that operate or own stakes in oil and gas fields earn fixed royalties based on the output from fields, in what are known as production sharing agreements (PSAs). While this can be quite a problem when it’s time to sell, for ENI, acquiring BP assets in Algeria would essentially turn Algeria into a hub.
According to BP’s annual report, BP’s net share of production in Algeria in 2020 was 141 million cubic feet of gas per day and 6,000 barrels of oil per day.
Eni, which has long-term gas import contracts in the country, produced 81,000 barrels of oil equivalent per day in 2020, including 152.5 mcf of gas.
