Apollo to invest $1bn in BP’s TANAP gas pipeline stake

Apollo Global Management (NYSE: APO) has struck a deal to acquire a 25% non-controlling stake in BP Pipelines (TANAP) Ltd., the BP subsidiary holding a 12% share in the Trans-Anatolian Natural Gas Pipeline (TANAP). The transaction, valued at approximately $1 billion, strengthens Apollo’s presence in strategic energy infrastructure while allowing BP to unlock capital from its asset portfolio.

TANAP is a critical segment of the Southern Gas Corridor (SGC), a network designed to transport natural gas from the BP-operated Shah Deniz field in the Caspian Sea to European markets. Spanning approximately 1,800 kilometers across Türkiye, TANAP plays a central role in ensuring energy security for Europe, particularly as the region diversifies its supply away from Russian gas.

The deal builds on a growing partnership between Apollo and BP, following their 2024 collaboration on the Trans Adriatic Pipeline (TAP), the final segment of the SGC. By deepening its investment in key natural gas infrastructure, Apollo positions itself as a major institutional player in global energy transport, while BP continues to optimize its asset portfolio.

Why Is BP Selling a Stake in TANAP, and What Does It Mean for the Company?

BP’s decision to divest a minority interest in TANAP aligns with its broader capital strategy of generating $20 billion in proceeds through asset sales and optimizations. The company remains the controlling shareholder in BP TANAP, ensuring it retains governance rights while benefiting from additional liquidity.

The sale allows BP to reinvest in core assets and explore emerging opportunities in low-carbon energy without completely relinquishing its influence over a critical piece of infrastructure. William Lin, BP’s Executive Vice President for Gas & Low Carbon Energy, emphasized that the transaction enables BP to “unlock capital from our global portfolio while retaining our role in this strategic asset for bringing Azerbaijan gas to Europe.”

The monetization of a stake in TANAP comes at a time when BP faces mounting pressure from activist investors, including Elliott Management, which recently acquired a near-5% stake in the company. Elliott has advocated for BP to focus more on high-margin oil and gas investments rather than aggressively expanding its renewable energy portfolio.

What Does Apollo Gain from Investing in BP TANAP?

For Apollo, this acquisition fits into its long-term strategy of expanding its holdings in essential infrastructure assets that offer stable, predictable returns. With over $751 billion in assets under management as of December 2024, Apollo has been actively seeking opportunities in the energy and natural gas sectors.

TANAP’s role in European energy security makes it an attractive investment. The pipeline is a crucial link in reducing dependence on Russian gas supplies, positioning it as a politically and economically valuable asset. Skardon Baker, Partner at Apollo, highlighted that the investment “aligns with Apollo’s strategic objectives to provide long-term capital solutions in critical infrastructure.”

Beyond financial returns, Apollo’s growing collaboration with BP suggests potential future partnerships in other energy assets, including infrastructure projects that support the transition to lower-carbon energy sources.

How Does This Deal Affect the Global Natural Gas Market?

TANAP is a key component of the broader Southern Gas Corridor, a pipeline system designed to enhance Europe’s energy diversification strategy. The corridor, which includes the South Caucasus Pipeline, TANAP, and TAP, connects the Caspian region’s natural gas reserves to European markets, reducing dependency on Russian imports.

BP has played a leading role in the development of the Shah Deniz gas field, the primary source of supply for the SGC. With Europe facing energy security challenges following geopolitical disruptions, investments in infrastructure like TANAP remain crucial.

The deal also reflects broader market trends, where financial firms are playing an increasing role in energy asset ownership. Institutional investors like Apollo, BlackRock, and Brookfield Asset Management have been expanding their energy portfolios, focusing on both traditional fossil fuel infrastructure and renewable energy projects.

How Have Investors Reacted to the Apollo-BP TANAP Deal?

BP’s stock performance has remained relatively stable, with shares trading at $34.43, reflecting a 0.35% decrease from the previous close. The market’s reaction has been cautious, as analysts weigh BP’s ongoing asset divestments against its ability to generate long-term growth. The company’s 12-month price target stands at $37.48, suggesting a potential 9.41% upside.

However, BP’s stock sentiment is being influenced by Elliott Management’s involvement. The activist investor has a track record of pushing companies toward higher-margin operations, and its stake in BP raises speculation about possible future restructuring efforts.

Apollo’s stock, on the other hand, has shown stronger upward momentum. Shares are currently trading at $149.09, up 3.96%, reflecting investor confidence in its acquisition strategy. With a 12-month price target of $165.21, analysts see an approximate 15.11% upside, reinforcing Apollo’s reputation as a strong player in alternative asset management.

What Are the Long-Term Implications of This Investment?

The Apollo-BP TANAP deal highlights the evolving landscape of global energy investment, where private capital is playing an increasingly influential role in financing and managing energy infrastructure. As traditional energy giants like BP rebalance their portfolios, institutional investors are stepping in to acquire assets that offer stable, long-term revenue streams.

For BP, the transaction provides financial flexibility to adapt to changing market conditions and investor expectations. The sale aligns with its broader capital allocation strategy while preserving control over an asset critical to its natural gas supply chain.

For Apollo, the investment cements its position as a major stakeholder in the energy transport sector. Its expanding footprint in global infrastructure suggests that similar deals could follow, particularly in regions where natural gas remains a key transitional energy source.

As energy markets continue to shift, deals like this will shape the future of how natural gas is financed, managed, and delivered—balancing economic returns with geopolitical and environmental considerations.