Eni and subsidiary Vår Energi to buy Neptune Energy for US$4.9bn

ITALIAN oil major Eni, and its Norwegian listed subsidiary, Vår Energi, have agreed to buy London-headquartered Neptune Energy for US$4.9bn. This is the largest cash deal in the European oil and gas sector for almost a decade, say finance experts. 

Neptune’s business in Germany is not part of the transactions and will continue to be owned and operated by the existing Neptune shareholders as a standalone group.

Under the agreement Eni, will acquire Neptune for US$2.6bn, while Vår Energi will acquire the company’s operations in Norway for US$2.3bn. Eni owns 63% of Vår Energi, which operates four fields on the Norwegian continental shelf (NCS), as well as holding ownership interests in 32 partner-operated fields. 

Describing itself as one of Europe's largest independent exploration and production companies, Neptune produces oil and gas at onshore and offshore locations throughout the North Sea, North Africa, and Asia Pacific.  

It’s operations in the UK include a 38.75% interest in the Cygnus field, one of the largest single producing gas fields in the UK. It typically exports more than 250m ft3 of gas daily, enough to supply 6% of the UK’s gas demand. Neptune shares the field with Spirit Energy who holds the remaining 61.25%. 

The acquisitions are expected to close by the end of Q1 2024. 

Commenting on the purchase, Claudio Descalzi, Eni’s CEO, said: ‘Neptune will contribute predominantly gas resources to Eni’s portfolio. Moreover, the geographic and operational overlap is striking, adding scale to Eni’s majority-owned Vår Energi; bringing more gas production and CCUS opportunities to the remaining North Sea footprint; building on Eni’s leading position in Algeria – a key supplier to European gas markets; and deepening Eni’s presence in offshore Indonesia, supplying the Bontang LNG plant and domestic markets. We also expect the added supply to provide further optimisation opportunities for Eni’s GGP operations.”  

Neptune is developing CCS projects in the Dutch North Sea that aim to pump 5–8m t/y of CO2 into the depleted gas fields around the Neptune-operated L10-A, L10-B and L10-E areas. Eni on the other hand has formed the Northern Endurance Partnership (NEP) to develop CO2 transport and storage infrastructure in the UK North Sea with BP, Equinor, National Grid, Shell and Total. 

Broken promises

The Financial Times says that the deal is particularly significant as European oil majors such as Eni, BP, and Shell have been more likely “to sell oil and gas assets than to buy them” following pledges to cut carbon emissions and invest in greener forms of energy such as biofuels and hydrogen. 

Despite pledges towards cutting emissions and investment in greener energy, big oil majors such as BP, Shell, and Aramco have all recently scaled back their promises to be more green, and have instead opted to continue pouring more money into oil and gas – much to the anger of environmental groups. 

Eni has also said it sees gas as a critical bridge energy source in the global energy transition and as such, “is focused on increasing the share of its natural gas production to 60% by 2030.”