BP plc has entered into an agreement with Apollo Global Management, Inc. under which funds managed by Apollo will acquire a non-controlling stake in BP Pipelines TAP Limited for around $1 billion. This subsidiary of BP holds a 20% share in Trans Adriatic Pipeline AG (TAP), which operates a crucial 880-kilometer segment of the Southern Gas Corridor, transporting gas from BP’s Shah Deniz field to Europe.
The transaction is expected to close in the fourth quarter of 2024, subject to regulatory and partner approvals. Following the deal, BP will remain the controlling shareholder of bp Pipelines TAP. This strategic move will assist BP in achieving its divestment target of $2 billion to $3 billion by 2024.
Both BP and Apollo are keen on exploring additional investments in gas and low-carbon energy in the future.
William Lin, BP’s EVP of gas and low-carbon energy, expressed his enthusiasm about the partnership, stating, “We are very pleased to come together with Apollo on this key piece of Europe’s energy infrastructure. Importantly, while bringing in a new investor, this does not diminish bp’s role in a strategic asset for our Azerbaijan gas business. 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.”
Skardon Baker, Apollo Partner, echoed similar sentiments, highlighting the long-term benefits for both parties. “We are pleased to partner with bp on an agreement that 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.”
Investors interested in gaining exposure to this sector can consider the Direxion Hydrogen ETF (ARCA: HJEN) and First Trust Exchange-Traded Fund IV FT Energy Income Partners Strategy ETF (ARCA: EIPX).
As a result of this announcement, BP shares climbed 0.79% to $32.09 in premarket trading on Monday.
