Italian oil and gas giant Eni and Malaysia’s state energy company Petronas have signed an investment agreement to establish a new joint venture in Indonesia and Malaysia. Freshfields is representing Petronas, while Skrine, CMS Law and Assegaf Hamzah & Partners (AHP) are acting for Eni.
Partner Philip Morgan and counsel Jeremy Tan led the Freshfields legal team. Skrine partners Fariz Abdul Aziz and Wei Xian Tan acted as Malaysian counsel for Eni, while CMS Law partner Tom Mallalieu and AHP partner M Insan Pratama acted as Indonesian counsel.
“We advised on the structuring of the transaction around approval requirements [under Indonesian regulations and the related production sharing contract, any change or transfer of participating interest, as well as changes to direct shareholders of participating interest holders],” AHP’s Pratama told Asia Business Law Journal.
AHP was also advising the parties on the merger notification report to the Indonesian competition supervisory commission, he added.
Under the agreement terms, Eni and Petronas will set up a 50:50-owned joint venture vehicle. Eni and Petronas will each contribute their interests in a total of 19 upstream assets located in Malaysia and Indonesia to form a financially independent entity, called NewCo.
NewCo plans to invest more than USD15 billion in the next five years. This investment will support the development of at least eight new projects and the drilling of 15 exploration wells, with the goal of producing 3 billion barrels of oil equivalent (boe) in discovered reserves.
This was the first asset combination project between two major oil companies located in two of the largest oil and gas producing countries in the Southeast Asia region, said Pratama.
He also said the transaction was structured to allow ENI and Petronas to leverage each other’s strengths, sharing risk and keeping costs down, all while maintaining the ability of each of the respective oil and gas blocks to seek additional partners to develop their untapped reserves.
The ENI IDD (Indonesian Deepwater Development) gas and condensate project in Selat Makasar (now known as ENI-Petronas), for example, when coming upstream, would revive Indonesia’s liquefied natural gas producing capacity almost to its peak, added Pratama.
He said this meant security for the now energy-hungry Indonesian industry.
Following the signing of the agreement, Eni and Petronas will work to secure all required regulatory, governmental and partner approvals in both Malaysia and Indonesia. Eni expects the deal to be completed in 2026, after securing all the customary and governmental approvals.
