According to banking and industry sources, BP and Eni are looking to fund up to $2 billion for their developing Angolan oil and gas joint venture in order to decrease debt and help build up their renewable operations.
In May, BP and Eni revealed that they were in talks to merge their Angola oil, gas, and liquefied natural gas (LNG) operations to establish one of Africa’s largest energy corporations.
Spinning off oil and gas assets is considered as a method to get more value out of them as they aim to minimize greenhouse gas emissions and migrate to renewable energy.
It’s also considered as a means for the parent firm to transfer the debt to the independent joint venture, making it easier for the parent company to raise funds for low-carbon ventures.
According to four sources, BP and Eni have approached a number of major Western banks in recent weeks to obtain ideas to raise $1.5-$2 billion for the joint venture.
One of the people stated, “They’re seeking to deconsolidate the Angolan assets in order to obtain cash for the joint venture’s upstream operations.”
“The aim isn’t merely to pay off debt, but to invest more and faster in Angola,” a second source explained.
BP and Eni did not respond to requests for comment.
BP CFO Murray Auchincloss told reporters in September that the joint venture sought to build a “far more efficient organization” to explore, drill, and produce oil and gas in Angola.
However, given increased investor and government pressure to cut investments in fossil fuels, many Western banks are reluctant to lend them money, according to the sources. This is especially true in nations where environmental regulations are not strictly enforced.
A senior US climate envoy said on Friday that Western fossil fuel corporations operating in Africa face a high risk of regulatory action, which is becoming clearer as the world attempts to address severe climate change.
