ITALIAN energy giant Eni has struck a deal to acquire North Sea-focused Neptune Energy under a deal worth nearly $5 billion, bringing a long period of sustained speculation to a close.

The deal will pave the way for Eni, which has assets in more than 60 countries, to become a major player in the North Sea again, having originally entered the market in 1964 and held a presence in the area for decades before beginning to sell off its interests from 2002.

Neptune has operations across Europe, North Africa, Indonesia, and Australia, and last year produced around 135,000 net barrels of oil equivalent per day.

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The acquisition may be viewed by some as a vote of confidence in the UK Continental Shelf, as the UK seeks to boost domestic energy production amid the upheaval which has followed Russia’s invasion of Ukraine.

In recent months a host of major players, including Harbour Energy and Ithaca Energy, have heavily criticised the energy profits levy imposed by the UK Government in response to the extraordinary profits producers were making after commodity prices rocketed following Russia’s assault on Ukraine. That came as households faced steep rises in their energy bills.

The windfall tax has sparked warnings that companies would direct investment outside the UK to markets with more competitive regimes. But earlier this month the UK Government scaled back the policy and said the levy would be scrapped if oil and gas prices fell below set levels.

The deal for Neptune will see Eni acquire all of the private equity backed company’s assets around the world, with the exception of Norway and Germany, which have an enterprise value of around $2.6bn under the terms agreed.

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In a separate agreement Vår Energi ASA, a joint venture in which Eni holds a 63.04% stake, has agreed to acquire Neptune Energy Norge AS, which incorporates Neptune’s Norwegian assets. The Norway business has an enterprise value of $2.3bn.

The Neptune business in Germany will continue to be owned and operated by the ultimate existing Neptune shareholders as a standalone group.

Neptune was set up by former Centrica executive Sam Laidlaw in 2015 and is currently owned by China Investment Corporation, funds advised by private equity players Carlyle Group and CVC Capital Partners, and certain management owners.

The UK accounts for around 11% of production at the company, which runs its UK North Sea operations from Aberdeen.

Its portfolio includes the giant Cygnus field in the North Sea, which it says is capable of meeting around 6% of the UK’s gas demand. Neptune is also preparing to start production from the Seagull oil field east of Aberdeen with BP following hefty investment.

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Neptune grew profits by 80% in 2022, to $3.8bn before interest, tax, depreciation and amortisation and exploration costs, from $2.1bn in the preceding year.

Mr Laidlaw, executive chairman of Neptune Energy, said: “Since Neptune’s formation in 2018, we have invested in the business and transformed the organisation, resulting in material improvements in safety, operational performance, and cost efficiency.

“I am incredibly proud of Neptune’s achievements over the past five years – and the hard work and dedication of so many people across our organisation, who, together with our shareholders, have contributed to the growth and success of the business.

“This transaction offers a new and exciting phase for Neptune, with significant growth opportunities supporting energy security and the energy transition, which will benefit from Eni’s and Vår Energi’s larger scale and available resources.”

Milan-headquartered Eni has more than 32,000 employees with operations in more than 60 countries.

The company said yesterday that the transaction “represents an exceptional fit” for the company. It noted the Neptune assets complement its geographical focus and support its aim of increasing the share of natural gas production in its portfolio to 60%, with the aim of reaching net-zero from its upstream business by 2030.

Eni's chief executive Claudio Descalzi said:"This transaction delivers to Eni a high-quality and low carbon intensity portfolio with exceptional strategic and operational complementarity.

"Eni sees gas as a critical bridge energy source in the global energy transition and is focused on increasing the share of its natural gas production to 60% by 2030. Moreover, the geographic and operational overlap is striking.”