Apollo makes billion-dollar move into Trans Adriatic Pipeline, partnering with bp

Apollo Global Management Inc. has announced that funds managed by the company, referred to as the “Apollo Funds,” will acquire a non-controlling stake in bp Pipelines TAP Limited, a subsidiary of bp that holds a 20% share in Trans Adriatic Pipeline AG (TAP). The transaction, valued at around $1 billion, allows Apollo to gain exposure to a world-class energy asset while enabling bp to unlock near-term value and reallocate capital more efficiently. Despite the transaction, bp will retain its role as the controlling shareholder of bp Pipelines TAP Limited.

Key Points of the Deal

The acquisition is a strategic move for both companies. For Apollo, it represents an opportunity to invest in a stable and strategic infrastructure asset with a stable cash flow profile. For bp, the deal supports its broader financial strategy, contributing to its divestment target of $2-3 billion for 2024. The agreement also aligns with bp’s goal of maintaining control over its strategic assets while improving capital efficiency.

William Lin, bp’s Executive Vice President of Gas and Low Carbon Energy, stated, “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.”

Broader Strategic Cooperation Between bp and Apollo

The partnership between bp and Apollo does not end with this transaction. Both companies have expressed an interest in exploring additional investment opportunities, including potential cooperation in both gas and low-carbon energy assets and infrastructure. This could potentially lead to joint investments in energy transition opportunities, aligning with global trends toward sustainable energy practices.

Skardon Baker, a Partner at Apollo, commented, “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.”

Overview of Trans Adriatic Pipeline AG

Trans Adriatic Pipeline AG owns and operates the 880-kilometre-long Trans Adriatic Pipeline, a crucial part of Europe’s energy infrastructure that serves as the final leg of the Southern Gas Corridor pipeline system. This system transports natural gas from the bp-operated Shah Deniz gas field in the Azerbaijan sector of the Caspian Sea to European markets, including Greece and Italy.

The pipeline begins at the Greek-Turkish border near Evros, connecting with the Trans Anatolian Pipeline (TANAP). It traverses northern Greece, crosses Albania, and the Adriatic Sea before landing in southern Italy, where it connects to the Italian gas network. TAP provides a direct, cost-effective transportation route as part of the broader Southern Gas Corridor, a 3,500-kilometre gas value chain stretching from the Caspian Sea to Europe.

Closing and Regulatory Approvals

The transaction between bp and Apollo is expected to close in the fourth quarter of 2024, pending customary regulatory and partner approvals. This deal is indicative of the type of strategic and collaborative partnerships that energy companies are increasingly pursuing to balance capital efficiency and sustainable growth.