Total SA agreed to sell a 25 percent stake in the Tempa Rossa oil field in southern Italy to Mitsui & Co. as part of a series of asset sales to raise as much as $20 billion.
Europe’s third-largest oil company will retain a 50 percent interest and continue to operate the Gorgoglione concession, where Tempa Rossa is located, according to a statement today. Royal Dutch Shell Plc holds the remaining 25 percent. The sale price wasn’t disclosed.
“It is another big step toward achieving the asset disposal objectives announced by Total for the period 2012-2014,” Olivier de Langavant, senior vice-president of strategy at Total’s exploration and production division, said in the statement.
Total was advised by Jefferies Group LLC.
With an estimated original 6 billion to 10 billion barrels of oil in place, the Tempa Rossa field is the largest undeveloped onshore oil field in western Europe, Mitsui said. Located in the Potenza province of the southern state of Basilicata, the field is scheduled to start production in 2016, pumping 50,000 barrels of oil a day at peak capacity. The field’s development is estimated to cost about 1.6 billion euros ($2 billion).
The purchase, which hinges on approval from the Italian government, is part of Mitsui’s plan to “acquire crude oil and natural gas assets in the European region,” according to the Japanese company. Mitsui already explores for shale gas in Poland and acquired production assets in the U.K. North Sea in 2012.
“Given its huge original oil in place, there is also upside potential in reserves by improving the oil recovery rate further in the future,” Mitsui said. Recoverable reserves are estimated at 440 million barrels oil equivalent.
Development of Tempa Rossa was delayed following an Italian probe into contracts at the field that led to the arrest of a local Total executive. The investigation has dragged on for more than four years.
Lionel Levha, head of Total’s Italian unit, was arrested by police as part of the investigation in 2008 and the company’s offices searched, Total said at the time. An Italian judge also suspended Total’s exploration concession for a year.
The original partners in the project, including Eni SpA and Exxon Mobil Corp., had expected production to begin as early as 2010.
Six exploratory wells have been drilled so far followed by production tests and “all confirmed good level of productivity,” according to Mitsui. Tempa Rossa’s underground oil is located in a 2,000-meter layer, one of the thickest in the world, it said.