BP, Eni consider merge of oil and gas operations in Angola

Eni and BP are considering combining their oil and gas operations in Angola to form one of Africa’s largest energy companies.

The two firms confirmed the report and said they have signed a non-binding memorandum of understanding and are in discussions on a joint venture that will include their liquefied natural gas (LNG) facilities.

A business plan will be agreed to allow the companies “to capture future opportunities in exploration, development and possibly portfolio growth, both in Angola and regionally.” The two companies have successful joint ventures in Norway, which serve as a model for the Angolan model.

“We see the combined Angola asset JV position providing for improved capital allocation, cost synergies, business efficiencies and an enhanced focus on value over volume. Eni was considering spinning off oil and gas operations in West Africa and the Middle East into new joint ventures to help reduce debt and fund its shift to low-carbon energy,” said Santander analyst Jason Kenney.

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Second largest oil producing country

Upon successful joint venture, oil and gas production from both Angolan portfolios would reach around 200,000 barrels of oil equivalent per day, BP and Eni said in a statement. The 50-50 joint venture will also be self-funded.

“The aim is to create a long-term future for operations in the country that will have a material portfolio of production, reserves and exploration prospects – one of the largest in sub-Saharan Africa,” said Gordon Birrell, BP’s head of production and operations, in an internal statement.

Angola is the second largest oil producing country in sub-Saharan Africa and an OPEC member with output of approximately 1.37 million barrels of oil per day (bpd) and an estimated 17,904.5 million cubic feet of natural gas production. The oil industry in Angola is dominated by the upstream sector exploration and production of offshore crude oil and natural gas.  Almost 75% of the oil production comes from off-shore fields.