BP Stock on the Rise Since Sale of bp Pipelines TAP Stake
BP plc BP stock has experienced a gain of almost 2%, since the announcement of an accord with Apollo Global Management, Inc. APO on Sept.16.
Strategic Importance of BP’s Trans Adriatic Pipeline AG
Recently, Apollo and BP entered into a deal valued at $1 billion, where Apollo Funds will be granted a non-controlling shareholding in bp Pipelines TAP Limited, which has about 20% shareholding in Trans Adriatic Pipeline AG (TAP).
TAP, the owner and operator of a natural gas transportation infrastructure, represents the final 880-kilometer segment of the Southern Gas Corridor pipeline system, spanning 3500 kilometers. This pipeline network carries natural gas from the Shah Deniz gas field in Azerbaijan, operated by BP, to key hubs in Greece and Italy.
BP’s Future Financial Framework
The proceeds from the deal, likely to be consummated by the fourth quarter of 2024, would help BP to execute its capital efficiency strategy while allowing it to retain control over the strategic asset for the Azerbaijan gas business. Per the company’s disciplined financial framework, the recent deal is part of BP’s ambitious divestment target of $2-3 billion.
BP, carrying a Zacks Rank #5 (Strong Sell) currently, will likely allocate the divestment proceeds toward other strategic goals, such as energy transition initiatives or other highly profitable projects.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BP Strengthening Strategic Partnerships
This deal would serve as a corridor for future partnerships for both companies, particularly for exploring additional investment opportunities. These include potential cooperation in both gas and low-carbon energy assets that align with the British energy giant’s broader strategy of transitioning toward cleaner energy sources.
Two other energy majors that are leading the energy transition race are Shell plc SHEL and Eni SpA E.
Shell has an ambitious target of becoming a net-zero emissions energy player by 2050 or earlier. By 2030, the integrated energy company plans to lower absolute emissions by 50%.
Eni has been building a full set of decarbonized products and services for clients to achieve carbon neutrality by mid-century. Even though the energy business scenario is challenging, Eni’s efficient exploration keeps it highly competitive.
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