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China’s CNPC scoops Eni’s Mozambique LNG prize

14 Mar 2013 19:13:07 | glm


Italian oil and natural gas company Eni has sold a 20% stake in the Area 4 block offshore Mozambique to China National Petroleum Corporation (CNPC), giving the Chinese state company and listed subsidiary PetroChina a firm foothold in east Africa's burgeoning LNG export sector.

CNPC entered into the block and associated onshore multi-train liquefaction development in northern Mozambique by buying 28.57% of the shares of Eni East Africa, which owns 70% of Area 4 in the Rovuma Basin, for $4.21bn, the companies said in separate statements on Thursday.

The deal is the Chinese state company's first major upstream investment in east Africa, although PetroChina and the two other Chinese national oil companies - Sinopec and CNOOC - have been among the industry's most aggressive buyers of upstream and liquefaction assets to meet China's growing gas import requirements.

The three Chinese state companies spent over $30bn last year in securing upstream oil and gas assets, which included PetroChina securing a 20% stake in the Shell-led 12m tonne per annum (mtpa) LNG Canada project and upstream assets in British Columbia, as well as roughly 10% of the Browse LNG project in Australia.

Eni said that it will still hold a 50% interest in offshore Area 4 - and its associated LNG export development. However, the completion of the transaction is subject to the fulfilment of certain standard conditions, including authorisation from the Mozambican authorities. Eni did not comment as to whether it would be prepared to further reduce its stake in Area 4, but CEO Paolo Scaroni has previously indicated that Eni wanted to retain around a 50% operator stake in the concession.

The Eni asset sale is the first in what is set to be a major corporate reshuffle in Mozambique's LNG export developments, with a number of companies looking to secure a secure a presence in the region before the multi-train liquefaction developments are sanctioned.

US-headquartered explorer Anadarko Petroleum and Indian telecommunications conglomerate Videocon have each put up a 10% stake in their Area 1 block (and associated LNG export project) for sale (see GLM 7 March 2013).

International oil companies with experience of delivering LNG projects such as Anglo-Dutch Shell and US-based ExxonMobil are among the obvious leaders of many companies understood to be talking to the two stakeholders about the asset sale, although this has not been confirmed by either company.

Anadarko and Eni agreed in principle in December 2012 to proceed with a unified liquefaction project, with an initial capacity of 20mtpa, which will be fed from the Anadarko-led Block 1 and Eni-operated Block 4.

Eni said on Thursday that it and Anadarko plan to sanction the project in 2014 - a delay to the end-2013 date it had previously given.

The companies have yet to unitise their shared fields and decide which resource to tap first, and what fields will be developed separately, but Eni said it planned to select the development concept by the end of this year.

Anadarko has suggested its estimated 30 trillion cubic metre (tcf) - or 849.5 billion cubic metre - Atum-Golfinho cluster in Area 1 could alone supply the initial two-train LNG plant.

Eni has, however, indicated that its 23tcf reserves "exclusively located" in Block 4 could easily support the initial two-train development.

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