Rosneft acquired 30% stake in Egyptian offshore gas field Shorouk by Eni

Offshore gas fieldRosneft acquired 30% stake in Egyptian offshore gas concession Shorouk from the Italian Eni for 1.5 billion USD, spreading investment risk with the Russian energy giant. Russian company agreed to pay 1.125 billion USD cash payment plus 450 million USD reimburse for investments already carried out by Eni from the Shorouk concession, which contains also Zohr gas field. According to the agreement, Russia’s biggest oil producer has an option to increase the stake to 35% under the same conditions.

The deal comes less than a month after Eni sold 10% stake in Zohr gas field to BP at the same implied price of 375 million USD. The both sales bring overall proceeds to Italian energy giant to around 2.1 billion USD.

Eni has cash flow problems, which fell to 19% in the third quarter of 2016, due to low oil prices, pledged at the start of the year to sell 7 billion EUR (7.43 billion USD) worth of assets to 2019.

Eni plans to cut the stake in Zohr gas field to 50%, which will improve the liquidity and share the risk of investments with the other partners, but also will solve the cash flow problems of the company. The first phase of the project will have gas hitting the market next year will cost a third of the total 12 billion USD for the first three years.

Zohr gas field was discovered by Eni in 2015 and is the biggest gas field ever found in the Mediterranean with estimated reserves of 850 billion cbm of gas. Eni expects to pump the first gas from the offshore field, which was discovered in August last year, by the end of next year. The discovery is expected to begin production next year at 28 million cbm per day, ramping up annually until it reaches 76 million cbm per day at the beginning of 2019.