Eni Bags $2.1bn From Zohr Sell-Off

Italy’s Eni this week again flagged up Egypt’s 30tcf Zohr as ‘Exhibit A’ in its fast-track upstream strategy having completed the $2.1bn sale of 40% of the field. Egypt has guaranteed it $5.8/mn BTU for Zohr gas.

Russian state giant Rosneft on 12 December agreed to pay Italy’s Eni $1.575bn for a 30% stake in Egypt’s giant Zohr field, confirming a deal flagged up by MEES (MEES, 9 December). This comes a week after BP, Eni’s habitual partner offshore Egypt, agreed to pay $525mn for a 10% stake, a price that is in line with the Rosneft deal and which puts an overall value of $5.25bn on Zohr.

Both firms have the option to buy a further 5% by the end of 2017 when Zohr is slated to come onstream. Though the option is “on the same terms” the deal is structured in such a way that the price paid will be higher. Rosneft’s $1.575bn payment and BP’s $525mn include pro-rata “reimbursement of past expenditure” of $450mn and $150mn respectively – implying that Eni has to date spent $1.375bn on Zohr development. However Eni’s development plan envisages total development costs of $12bn of which around $3bn is to first gas at end-2017: CFO Massimo Mondazzi last month said that he expects 2017 Zohr spending to be “a bit higher” than 2016’s $1.4bn (MEES, 11 November). (CONTINUED - 1030 WORDS)