‘Italian multinational oil and gas company, Eni, has entered an agreement to sell 49.9% of its stake in subsidiaries operating two groups of gas pipelines, the Trans Tunisian Pipeline Company (TTPC) and the Trans-Mediterranean Pipeline Compay (TMPC), that run between Algeria and Italy, to Italian energy infrastructure company, Snam, for $435.7 million.
Under the new agreement, Eni will transfer its ownership stakes in the onshore TTPC pipeline, which runs from the Algeria-Tunisia border to the coast of Tunisia, and the offshore TMPC gas pipelines, connecting the Tunisian coast to Italy, to a newly incorporated Italian company, NewCo, in which Eni will retain a 50.1% stake.
The payment of the purchase price will be funded by Snam through its own financial resources, which are mainly derived from managing Italy’s natural gas transport grid and operating most of the European country’s gas storage facilities.
Snam CEO, Marco Alverà, stated, “This deal consolidates Snam’s central role in Italy’s security of supply, as well as in energy transport from the Mediterranean region. Through this transaction, Snam is bridging its infrastructure towards North Africa, which represents a key area for gas supplies to Italy and forward looking for hydrogen development.”
The strategic deal is expected to support the broader strategy of fast-tracking potential development initiatives in green hydrogen, permitting Eni to invest in its energy transition and ensure the security of natural gas supply to Europe, particularly Italy, which is currently upgrading its national network to facilitate the use of green hydrogen.
“This transaction allows us to free up new resources to be used on our energy transition path while at the same time maintaining the management of a strategic infrastructure with Snam to ensure the security of natural gas supply to the country,” stated Eni CEO, Claudio Desclazi, adding, “Gas will play a key role in the transition of energy systems to zero-emission models, and it is important to maintain the availability and diversification of supply routes for this resource.”
Subject to authorization from the Government of Tunisia and consent from shareholders, the parties expect to close on the transaction by the third quarter of 2022.
The agreement includes an earn-in and earn-out mechanism based on the revenues generated by the target companies – companies currently active in the pipelines that will be controlled by NewCo – which, in 2020, generated a combined income of approximately $101.6 million.
Eni and Snam will exercise joint control over NewCo based on equal governance principles, with the two companies stating in a joint statement that they will consolidate shares based on equity.