Eni SpA and BP Plc have completed a deal to merge their oil and gas operations in Angola, the groups said on March 11, confirming what sources earlier exclusively told Reuters.

The deal will create a company called Azule Energy that is expected to be Angola’s largest producer with stakes in 16 licenses and in the Angola LNG joint venture.

Azule Energy will also take over Eni’s stake in Solenova, a solar company jointly held with Angola’s Sonangol.

Earlier three sources said the two energy groups were close to raising around $2.5 billion in financing to help fund the joint venture and were also close to a separate agreement for Eni to buy stakes in Algerian gas plants.

The two companies last year announced plans to combine their Angolan businesses into a self-funded company with oil and gas production of around 200,000 boe/d.

The merger is part of the two companies’ overhaul of their oil and gas businesses as they shift towards renewables and low-carbon energy in the coming decades. It will also help them to reduce debt.

Algerian Gas

Under a separate deal, BP is close to selling to Eni its stakes in two major gas ‎developments in Algeria—In Salah Gas and In Amenas, the sources said. The value of such a deal is unclear.

One of the sources said the companies were in advanced talks. BP and Eni declined to comment on Algeria.

The two sides have struggled to agree on a way to balance the value of their Angolan assets since Eni’s operations and oil and gas reserves are bigger and hold a larger value than BP’s, two of the sources said.

The statements issued by both companies on March 11 said BP’s gross assets in the deal were worth about $6.8 billion at the end of 2021, while those of Eni were worth $7.3 billion.

The change of ownership at the two gas plants in the south of Algeria will help Eni develop Algeria’s energy infrastructure and export gas to southern Europe via pipelines, the sources said.

Italy is looking to ramp up gas imports from Algeria to help reduce its reliance on flows from Gazprom following Russia’s invasion of Ukraine. To do that Algeria needs to increase its upstream gas production.

Eni, which holds long-term gas contracts with state-owned energy giant Sonatrach, has historic ties with Algeria. Last year it signed a series of accords aimed at increasing production in the country.

With one of Europe’s biggest gas transport networks, Italy is seen as a future bridgehead into Europe for gas—and zero emissions hydrogen—produced in North Africa and beyond.

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