Hopefuls queue up for slice of Mozambique gas
The world's largest new gas province is offering prospects in Mozambique LNG
Interests on offer in the world's largest new gas province are in the sights of companies with liquefied natural gas (LNG) expertise, companies with cash, and a company with political links. The big prize is control over the LNG complex to be built for Mozambique's vast gas reserves in Areas 1 and 4, operated respectively by Anadarko and Eni.
With 20% of Area 1 being offered by Anadarko and a participant, Videocon, and Eni hinting it will sell part of its 50% in Area 4, the way is open for a buyer to emerge with the largest overall share in the gasfields, which the operators have said will not be unitised in the immediate future. Anadarko has no LNG experience and Eni is not one of the larger LNG players, so the two operators could be willing to let an LNG heavyweight take control.
According to reports quoting a Mozambique government official, Shell and ExxonMobil have both opened talks with Anadarko. Both companies have extensive LNG experience, and Shell has already tried to enter Area 1 when it bid unsuccessfully for Cove Energy's share last year.
But cash-rich companies from Asia are also interested. India's ONGC and Oil India, both state-controlled, are reported to have made a joint bid for the 20% share of Area 1, and state-owned PetroChina is also said to be interested. Another state-owned Chinese company, China National Petroleum Corporation, has already sealed a deal to acquire 20% of Area 4 from Eni for $4.210bn. Although the Asian companies also lack substantial LNG experience, their positions are strengthened because their home countries are the likely destinations for Mozambique's LNG.
Meanwhile, Russia's state-controlled Gazprom is the wild-card: the company has said it is interested in a share in Area 4, and Eni has said it will talk. Gazprom wants to build-up its position in LNG - despite being the world's largest gas producer, it has only a small share of the LNG market - and it also wants to build-up its position in Asia, where gas prices are higher than in Europe. A possible agreement between Gazprom and Eni would extend the existing close relationship between the two companies.
Anadarko's target is to export the first cargo of Mozambican LNG in 2018 - although the schedule looks tight, with infrastructure including port facilities, service bases, roads and accommodation all to be constructed. The company is now planning to start-up with four trains of 5m tonnes a year (t/y) each, instead of two. Eventually there will be 10 trains, giving a capacity of 50m t/y.
Upstream, the reserves are immense and exploration continues. The two operators' estimates for gas-in-place amount to over 5 trillion cubic metres - Anadarko says it has 2.83 trillion cm in Area 1 and Eni says it has 2.27 trillion cm in Area 4. Anadarko gives a range of 0.99-1.84 trillion cm for recoverable gas in its block. For comparison, the entire remaining reserves of Algeria - one of the world's largest producers - are put at 4.5 trillion cm while Norway has 2.2 trillion cm.
Mozambique: Gas interests on offer
Anadarko (operator) 36.5%*
BPRL Ventures 10.0%
* 10.0% for sale from each company
Eni (operator) 50.0%*
Galp Energia 10.0%
* Unspecified share for sale