ALGERIA – Italian oil and gas company Eni has agreed to sell a 49.9% stake of its subsidiaries that operate the gas pipelines between Algeria and Italy to energy infrastructure firm Snam for US$435.7 million.

The deal includes the onshore gas pipelines that run from the Algeria-Tunisia border to the coast of Tunisia (TTPC), and the offshore gas pipelines that connect the Tunisian coast and Italy (TMPC).

Under the new agreement, Eni will transfer its ownership stake in the two pipelines to a newly incorporated Italian company NewCo.

Eni will continue to have a 50.1% stake in NewCo, while the remaining 49.9% will be sold to Snam.

The deal is subject to authorisation from the Tunisian government and consent from shareholders, but the company hopes the deal will be finalised by the third quarter of 2022.

“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,” Eni CEO Claudio Descalzi commented.

“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.”

Eni said that the transaction will support its broader strategy, which aims to optimise its portfolio while fast-tracking growth in energy sectors.

Snam will benefit from its position on a strategic route for the security of natural gas supplies to Italy and the opportunity to support potential developments within the hydrogen value chain also by means of natural resources in North Africa.

“This deal consolidates Snam’s central role in Italy’s security of supply, as well as in energy transport from the Mediterranean region,” Snam CEO Marco Alverà said.

“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. In the future, North Africa could also become a hub for producing solar energy and green hydrogen.”

The deal will also include an earn-in and earn-out mechanism. This will be calculated based on the revenue created by the target companies. The target companies generated a net income (100% of Eni’s stake) of around 90 million euros (US$102.14m) in 2020.

Eni and Snam will exercise joint control over the NewCo, on the basis of equal governance principles and both companies will therefore consolidate NewCo through the equity method.

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