) is farming out of a German gas grid joint venture. German
utility EnBW, which is the other partner holding 50% stake has
purchased Eni's interests in the joint venture. EnBW, which has
taken complete control over the asset, is expected to generate
stable returns over the coming years.
Established in 2002, EnBW Eni Verwaltungsgesellschaft mbH (EEV)
comprises gas grid Terranets BW GmbH as well as gas supplier
Gasversorgung Sueddeutschland (GVS).
Terranets, which manages a 2,000 kilometer gas pipeline system in
the German state of Baden-Wuerttemberg, along with GVS, garnered
sales of 1.7 billion euros in 2013. Notably, Terranets has 278
In Oct 2013, Eni had stated that it was in negotiation with EnBW
over the future of EnBW/Eni Verwaltungsgesellschaft, thus raising
speculation relating to the oil and gas group's intention to sell
off its stake.
The sale is subject to approval from the relevant antitrust
authorities. Per EnBW, both parties have agreed not to reveal the
purchase price. However, sources familiar with the process have
informed Reuters that a deal had been struck, putting the value of
the stake at over 150 million euros ($205 million).
The joint venture, which operates a 2,000 kilometer gas pipeline
system in the German state of Baden-Wuerttemberg, is likely valued
at about 300 million euros as per the sources.
Weak energy demand and a substantial boom in renewable energy
capacity across Europe have caused the utilities to suffer from
falling profits. This has led regulated power and gas networks to
be attractive assets for utilities.
Eni's decision to farm out forms part of its strategy of
rationalizing the mid-downstream portfolio by exiting regulated gas
transport assets. Eni remains actively involved in the
commercialization of natural gas in Germany through its commercial
branch in Dusseldorf.
Currently, Eni carries a Zacks Rank #5 (Strong Sell). Meanwhile,
one could consider better-ranked players in the same sector like
BPZ Resources, Inc.
Magellan Midstream Partners LP
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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