BP and Eni poised to create Angola’s largest producer by combining country’s businesses

Oil and gas giants BP and Eni have signed an agreement to form a new 50/50 independent company in Angola through the combination of the two companies’ Angolan businesses. The new company will be named Azule Energy and it is expected to be Angola’s largest producer.

The agreement follows the memorandum of understanding between the companies agreed in May 2021.

As informed by the two companies last Friday, Azule Energy will be a new international energy company, independently managed, with more than 200,000 barrels equivalent a day (boe/d) of net oil and gas production and 2 billion barrels equivalent of net resources. It is expected to be Angola’s largest producer, holding stakes in 16 licences, as well as participating in the Angola LNG joint venture. Azule Energy will also take over Eni’s stake in Solenova, a solar company jointly held with Sonangol.

Azule Energy will have a strong pipeline of new projects starting up over the next few years, including the new Agogo and PAJ oil projects in Blocks 15/06 and 31, respectively. It will also develop the New Gas Consortium (NGC), the first non-associated gas project in the country, which will support the energy needs of Angola’s growing economy, its decarbonisation path and strengthen its role as a global LNG player.

BP and Eni 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. Azule Energy will continue to develop the full potential of the country’s upstream sector, while also positioning itself to capture new opportunities from the energy transition with the growing role of gas and renewables in its portfolio.

Since announcing the intent to form the JV in May 2021, BP and Eni have worked closely with the Angolan government and the creation of Azule Energy will be subject to all customary governmental and other approvals, with the aim of completing the transaction in the second half of 2022. Once set up, Azule Energy will be equity accounted for by BP and Eni.

Bernard Looney, BP’s chief executive, said: “Azule Energy draws on our combined strengths and skills and, more importantly, is anchored in our shared values and beliefs about what the future of energy should be. Ultimately Azule Energy will be able to drive efficiencies and realize new opportunities across an expanded and truly exciting portfolio.”

Claudio Descalzi, CEO of Eni, said: “The creation of Azule Energy is a further step in advancing our strategic approach to accelerate growth through focused lean and financially independent companies. Combining two world-class businesses into one stronger team, Azule Energy will leverage synergies and high-quality assets, boosting activities in Angola and will have one of the largest portfolios of production, development and exploration opportunities in Sub-Saharan Africa.”

Currently, Eni is the operator of Blocks 15/06 Cabinda North, Cabinda Centro, 1/14, 28 and soon NGC. In addition, Eni has a stake in the non-operated blocks 0 (Cabinda), 3/05, 3/05A, 14, 14 K/A-IMI, 15 and in Angola LNG.

Over the last eight months or so, Eni started production from three projects in Angola. In late July 2021, the production started from the Cuica field, in Block 15/06 of the Angolan deep offshore, via the Armada Olombendo FPSO vessel. Then, in September 2021, Eni started production from the Cabaça North development project, also in Block 15/06 of the Angolan deep offshore and also via the Armada Olombendo FPSO.

The third project, the Ndungu Early Production (EP) development located in Block 15/06, started production in February 2022.

BP is the operator of Blocks 18 and 31 offshore Angola and has non-operated stakes in blocks 15, 17, 20, and 29. BP also has non-operated interests in NGC and Angola LNG.

In November 2021, BP brought online the Platina field in Block 18, which is located in the Angolan offshore, approximately 140 kilometres northeast of Luanda. Platina is a subsea tie-back development to the existing Greater Plutonio FPSO vessel on Block 18. It will access an estimated 44 million barrels of oil reserves and, at peak, is expected to add 30 thousand barrels of oil per day to Block 18 production.

BP’s and Eni’s total production in Angola is approximately 100,000 boe/d each. At the end of 2021, the value of BP’s gross assets included in the JV was approximately $6.8 billion while the value of Eni’s assets was approximately $7.3 billion. The assets generated a pre-tax profit of approximately $1.1 billion for BP and $0.5 billion for Eni at the end of last year.