The global energy giants BP and Eni are considering merging their oil, gas and liquefied natural gas assets in Angola into a joint venture to form one of Africa’s largest energy companies.
The two companies have signed a non-binding memorandum of understanding (MoU) to discuss merging their upstream portfolios in the West African nation. If the talk concludes successfully it could be a boon to the country’s troubled oil sector, which has seen production slump by more than a third since 2015 amid chronic under-investment.
According to the companies, a business plan will be agreed to enable the oil firms to capture future opportunities in exploration, development and possibly portfolio growth, both in Angola and regionally. The two companies already have successful joint ventures in Norway, which serve as a model for the Angolan model.
“We see the combined Angola asset joint venture position providing for improved capital allocation, cost synergies, business efficiencies and an enhanced focus on value over volume,” Santander analyst Jason Kenney said.
According to reports that came out last month, the Italian multinational oil and gas company, Eni plans to spin 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. The report also found that Eni had held discussions with BP.
Oil and gas production from both Angolan portfolios would reach nearly 200,000 barrels of oil equivalent per day, BP and Eni said in a statement.
The proposal is subject to governmental, regulatory and partner approvals. Vendors have been appointed to raise finance for the plans. The 50-50 joint venture will also be self-funded, the companies said, without providing further details.