UK energy major BP (LON: BP) had sold a share in a key Caspian pipeline to US investors Apollo (NYSE: APO) in a deal raising $1billion (£760m).
The purchase includes a non-controlling stake in BP Pipelines TAP, a subsidiary that holds a 20% share in Trans Adriatic Pipeline AG (TAP).
TAP is is the owner and operator the final 880-kilometre (547-mile) leg of the Southern Gas Corridor pipeline system that transports natural gas from the BP-operated Shah Deniz gas field in the Azerbaijan sector of the Caspian Sea to markets in Europe.
Connecting with the Trans Anatolian Pipeline at the Greek-Turkish border, TAP crosses Northern Greece, Albania and the Adriatic Sea before coming ashore in Southern Italy to connect to the Italian natural gas network.
In a statement, BP added it will look to partner with Apollo on “additional investment opportunities, including potential co-operation in both gas and low carbon energy assets, and infrastructure”.
Apollo, which has around $696 billion of assets under management, previously walked away from a deal to buy the UK’s energy services firm Wood (LON: WG).
BP said the proceeds from the transaction, which is expected to complete by the end of the year, will contribute to its 2024 divestment target of $2-3bn.
William Lin, BP’s EVP gas and low carbon energy said “this does not diminish BP’s role in a strategic asset for our Azerbaijan gas business”.
He added: “We see great potential in building innovative arrangements such as this and look forward to continuing to explore further opportunities with Apollo through growing this collaborative relationship.”
Apollo’s Skardon Baker said the deal will “provide our investors with long-term exposure to an industry-leading infrastructure asset with a stable cash flow profile, while allowing BP to meet its objectives of retaining control and executing on its capital efficiency strategy”.
Leslie Mapondera, also of Apollo, added said the deal reflected an “innovative transaction structure”.
He said: “Together, we see more potential opportunities, as we look to leverage Apollo’s long-term capital and sustainability & infrastructure investment expertise to partner with BP on its strategic plans, including energy transition opportunities.”
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