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Russia’s oil giant Rosneft has closed the deal to buy from Italy’s Eni a 30-percent stake in the offshore concession in Egypt where the giant Zohr gas field is located, for US$1.125 billion, the Russian firm said on Monday.
Rosneft also refunded its share in past project costs to the Italian company, which discovered Zohr in 2015 and plans to start production by the end of this year.
Zohr has a total potential of 850 billion cubic meters of gas in place and is the largest natural gas field ever discovered in the Mediterranean, according to Eni, which has also divested an additional 10 percent in the concession to supermajor BP.
Under the initial terms of Eni’s deal with Rosneft from December last year, the Russian firm would pay US$1.125 billion and the pro-quota reimbursement of past expenditures, which amounted at the time to around US$450 million. In addition, Rosneft has an option to buy a further 5-percent stake under the same terms.
The completion of the 30-percent acquisitions will allow Rosneft to “share significant experience in offshore field development, using existing competencies in offshore production. Participation in the development of a unique production asset will strengthen positions of Rosneft in the strategic markets of Europe and Middle East,” the Russian company said.
“It opens up the opportunities for the Company to reinforce its positions in the promising and strategic region, broadens potential of our trading division and enhances our mutually beneficial cooperation with Egypt,” Rosneft chief executive Igor Sechin said, commenting on the completion of the acquisition.
BP and Eni, the other participants in the Zohr development project, are betting big on investments in Egypt, especially in gas production. Eni plans US$10 billion investments in Egypt over the next five years, and BP is investing in 2016-17 more money in Egypt than in any other country in the world. In May this year, BP announced the start of gas production from the first two fields, Taurus and Libra, of the West Nile Delta development in Egypt.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.