The Zohr field is a lucrative catch and a crucial growth engine for the company
With the continuous pressure coming from green groups forcing the big oil to ban the use of coal and crude, energy companies are increasingly moving towards natural gas. The latter not only turns out to be less harmful than coal and crude oil, but also cheaper as well.
Similar is the case with British petroleum giant, BP plc (ADR) (NYSE:BP), which agreed to purchase 10% share of interest in Zohr gas field, off the coast in Egypt. The latest move would further strengthen the foothold of the energy company in Egypt.
Zohr field, assuming its massive size, turns out to be a lucrative catch and a crucial growth engine for the big oil. Owned and operated by Eni SpA (ADR) (NYSE:E), the gas block contains around thirty trillion cubic feet of natural gas.
Buying a stake worth $375 million in Shorouk region would enable BP to make its mark into one of the largest natural gas discoveries in recent times. To navigate through the low price environment with West Texas Intermediate and Brent crude trading below $50 per barrel from the peak of $115 per barrel in June 2014, the Italian oil producer has stated plans to target asset sales worth 7 billion Euros by the end of 2019, majorly via disposition of interests in recently discovered fields. Via the disposal proceeds, Eni would not only be able to bolster its current cash flow position but would also be able to fund future projects.
To not only Eni, but also the deal would also be beneficial to BP. Bob Dudley, CEO of BP, stated in a press conference: “This interest in a truly world-scale asset will complement our existing Egyptian business.” Subject to gaining approval from the regulators, the deal would reach completion in the second half of next year.