Rosneft closes $1.1 bil deal to buy 30% stake in Egypt's Zohr natural gas field from Eni

10 Oct 2017

Russia's Rosneft said Monday it had closed the deal to acquire a 30% stake in the giant Zohr gas field in the Mediterranean Sea from Italy's Eni, in a move aimed to 'strengthen positions of Rosneft in the strategic markets of Europe and Middle East.'

The company paid $1.125 billion for the stake and also 'refunded its share in past project costs to Eni,' it said in a statement.

Following the deal, Eni holds a 60% stake in the project and BP owns the remaining 10% interest in the largest deepwater gas field offshore Egypt, Rosneft said.

Zohr is the biggest Mediterranean gas field discovered to date, with an estimated 850 Bcm (30 Tcf) of gas in place.

'Having closed the deal ... Rosneft has entered the world class project,' Rosneft CEO Igor Sechin was quoted as saying in the statement. 'It opens up the opportunities for the company to reinforce its positions in the promising and strategic region, broadens potential of our trading division and enhances our mutually beneficial cooperation with Egypt.'

Eni agreed to sell a 30% stake to Rosneft while granting the Russian company an option to purchase a further 5% Shorouk stake in December 2016.

Zohr, discovered in August 2015, is in the deepwater Shorouk block in the gas-prone Eastern Mediterranean basin, within Egypt's exclusive economic zone.

The Eastern Mediterranean basin, which spans a number of international maritime boundaries, also contains multi-Tcf deepwater gas deposits offshore Israel and Cyprus, but none on the scale of Zohr.

Eni, which at the time held 100% of the Shorouk concession, was granted approval for the Zohr development lease in February 2016.

In February 2017, Eni sold a 10% stake in the Shorouk concession to BP, reducing its own holding to 90%.

A further increase of Rosneft's share in the project, however, could be problematic as most recent sanctions by the US on Russia, motivated largely by alleged Russian meddling in the 2016 US presidential election, could hit projects in which the Russian-sanctioned company has more than 33%.

In May, Rosneft and Eni agreed to expand cooperation in Russia and third countries, including at Zohr, to build up on their earlier agreements for projects in Russia.

Rosneft-Eni joint work in Russia has seen little progress recently, including due to the US and EU sanctions imposed on Moscow over its role in the Ukrainian political crisis in 2014, as some joint projects fell under the sanctioned category.

platts

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