ENI Eni Spa

By Benoit Faucon 

Eni SpA has agreed to acquire a controlling stake in BP PLC's assets in Libya and plans to resume oil exploration there, the Italian energy giant said Monday.

The company will join a handful of others betting on prospects in the war-torn nation. Some companies are investing in Libya because "oil prices are high and the political situation is reasonably stable," said Jason Pack, president of U.S.-based consultancy Libya Analysis. "That means more oil will come out."

Insecurity had forced BP to suspend searches for oil and gas as part of three $900-million projects four years ago.

The country descended into chaos following a 2011 civil war that toppled dictator Moammar Gadhafi. Last month gunmen carried out a deadly attack on the offices of Libya's state-run company National Oil Corp., an incident for which the radical Islamic State later claimed responsibility.

But in recent months, NOC has also negotiated a return to operations in fields and ports formerly blocked by militias, boosting its output by up to roughly 1 million barrels a day. That has led to renewed appetite for its oil concessions.

Eni said it has signed a letter of intent to acquire a 42.5% stake in the assets held by the U.K.'s BP PLC, the companies said in a press release. The share purchase will give the Italian major operatorship of the projects, where it intends to restart exploration next year, they said, without providing details on the terms of the deal.

"This agreement is a clear signal and recognition by the market of the opportunities Libya has to offer and will only serve to strengthen our production outlook," NOC Chairman Mustafa Sanalla said. "This initiative will hopefully drive further inward investment and facilitate higher production levels."

Last week, NOC said Russia's state-controlled Tatneft had agreed to return to Libya seven years after suspending operations. The Libyan company also has held discussions with Gazprom, Russia's largest government-owned company, to reactivate a giant gas project in Libya.

The asset transfers reflected oil companies' unequal situations, said Mr. Pack, who frequently advises firms operating in Libya. Those in Southern and Eastern Europe are backed by their governments and have less stringent safety and security constraints, unlike their peers in the U.K. and the U.S., he said.

In March, Total SA bought a 16.33% stake of an East Libyan concession from Marathon Oil Corp. for $450 million, though the French company remains embroiled in a dispute with NOC over the purchase.

Write to Benoit Faucon at benoit.faucon@wsj.com

(END) Dow Jones Newswires

October 08, 2018 16:25 ET (20:25 GMT)

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