Italy’s biggest oil and gas company Eni SpA (E - Free Report) has inked an agreement for the purchase of a 25% stake as well as operatorship of exploration license Offshore Indus Block G. Eni did not reveal the financial details of the deal.
Located in Pakistan’s Indus Basin, the Block spans 7,500 square kilometers and is considered to hold immense potential. The Block lies in ultra deep water and remains underexplored. Initially, a multi-disciplinary examination will be undertaken to identify the most suitable way to explore Offshore Indus Block G.
The other partners in the Block comprise the two state companies — OGDCL and PPL — as well as United Energy Pakistan Limited, along with Eni. Each partner has an interest of 25%.
Eni’s operations in Pakistan dates back to 2000. Currently, it is the largest international producer in the country with a daily output of about 58,000 barrels of oil equivalent. Eni has a working interest in other offshore blocks — Indus Block C and Block N — where it holds 60% and 70% interest, respectively. These Blocks lie in close proximity to the newly attained Offshore Indus Block G.
Pakistan is on the threshold of becoming the next exploration hub in Asia. The region’s focus on finding commercial oil and gas would aid in meeting future energy demands. Eni’s holding in the high quality exploration blocks with immense potential that remain largely unexplored bode well going forward.
The deal marks a major step in the company’s effort to build a worldwide unconventional portfolio. It will also help Eni to strengthen its position in Pakistan.
Eni, which recently received regulatory approval for the Goliat oilfield in the Barents Sea, in partnership with Statoil ASA , holds a Zacks #3 Rank that is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain a Neutral recommendation on the stock.