Andres Gonzales, Gram Slattery, and Isla Bnnie

LONDON, (Reuters) – EIG Global Energy Partners has been in discussions with Repsol (OTC) about buying a portion of Spanish oil and gas exploration and production company. Three sources familiar with the matter informed Reuters.

Sources say that the U.S. fund wants to acquire up to 25% Repsol’s upstream business. The deal will give Repsol cash in order to finance its clean-energy plans, such as building solar farms and other renewable energy facilities.

Sources did not provide a price for the deal. However, analysts estimate that the upstream business could be worth as much as 14 billion to 18 billion euros (between $15 billion and $19 million), including debt.

Sources said that the two companies entered into talks following an EIG offer. The sources declined to identify themselves because it was confidential. The sources said that talks might take many months, and they were not certain of a final agreement.

Repsol and EIG did not respond to Reuters’ requests for comment.

Repsol would receive funds from the deal to support its aim of more than double its low-carbon power production capacity to 7.5 gigawatts by 2025. The output of one nuclear reactor is approximately equivalent to 1 gigawatt.

Repsol’s upstream unit, just like many other oil companies, has a complex structure according to its annual financial statements for 2021. It consists more than 100 separate units.

To streamline its operations, the company decided to sell its interests in various exploration companies across several countries and to transfer its Russian assets to Gazprom MCX: Neft in Jan.

EIG is a Washington-based private investor that specializes in investments in infrastructure and energy. The consortium spent $12.4 million on a 49% interest in the pipelines of oil giants. Saudi Aramco Last year (TADAWUL)

CLIMATE GOALS

Russia’s invasion in Ukraine has driven oil and gas prices up to multi-year records, resulting in higher returns for producers.

Repsol shares rose 48% in the first quarter of this year. This trading is above summer 2011 levels, long before COVID-19 ravaged global energy supply and demand.

The Oil & Gas index has gained 27% this year and is now trading at its highest since October 2018.

Repsol was the first major oil and natural gas producer to promise that its products would emit no more carbon by 2050 than can be taken up by natural sinks like forests, or artificial systems such as carbon capture.

It has stated that it would spend more than one third of its 19.3 billion euro by 2025 in low-carbon projects like renewable energy or hydrogen production, without creating climate-warming emissions.

It has committed to prioritize less-carbon-intensive oil and gas projects that will pump for shorter periods of time.

Repsol has its main oil and natural gas production locations in North America. Repsol’s proven reserves of gas account for 70%, making it more productive than oil.

The upstream segment of Repsol has higher production costs and lower revenues than competitors. Analysts also note that it boasts the best organic reserve replacement ratios.

It expects to average 585,000 barrels oil equivalent per day by 2022.

Repsol’s last stake in Russian exploration companies was sold by Repsol in January. This left Repsol free of the possibility of writing down assets. Larger peers, such as BP (NYSE:), are now navigating following Moscow’s invasion.

($1= 0.9356 euros)