Russia's Rosneft takes part of Egyptian gas field for $1.6B

AP News
Posted: Dec 12, 2016 9:51 AM

MOSCOW (AP) — Russia's state-owned oil giant, Rosneft, is buying a 30 percent stake in an offshore Egyptian gas field in a deal worth $1.6 billion.

Italian energy company Eni said Monday it would sell the stake to Rosneft. The Russian company will pay $1.125 billion for the holding in the Shorouk concession, which contains the giant Zohr gas field, and $450 million to cover past expenditures on the project.

It has the option to buy a further 5 percent before the end of 2017.

Russian media cited Rosneft CEO Igor Sechin as saying during a visit to Egypt that the agreement was signed.

The Zohr gas field, discovered by Eni in 2015, contains an estimated 850 billion cubic meters of gas and is the biggest gas field ever found in the Mediterranean. The first gas from the field is due to be pumped next year.

The deal is the latest in a series of major acquisitions for Rosneft, which in October purchased Russian oil producer Bashneft for $5.3 billion and bought into India's Essar Group. Rosneft has said it is looking to expand its natural gas operations.

For Eni, the sale is part of a strategy of divestments. It said that Rosneft's involvement will also help raise funds to support further exploration.