Large Mozambique gas stake on offer
Bids were invited in March for a substantial interest in one of the world's largest undeveloped gas areas
Anadarko, operator for an offshore area which is due to supply a 10-train liquefied natural gas (LNG) complex, and India's Videocon, a participant, are selling a combined 20.0% holding in the licence. The sale is designed to attract one of the largest LNG players into the development, which is being targeted for a go-ahead decision this year.
Each company is to sell 10.0% in the Area 1 licence, with Anadarko's interest falling to 26.5% and Videocon - controlled by Indian businessman Venugopal Dhoot - selling its entire holding. Other interests in the licence are Mitsui, with 20.0%, India's BPRL Ventures, 10.0%, Thailand's PTT, 8.5% and the state's ENH, 15.0%.
Area 1 has seen three years of spectacular gas discoveries by Anadarko, whose latest estimate of the block's resources is the range 990 billion-1.84 trillion cubic metres (cm) recoverable, out of gas-in-place of 2.83 trillion cm. Approximately half the gas is contained in the multi-field Prosperidade complex, about 40 km off the coast in water approaching 1,500 metres deep, and half is in the Golfinho-Atum complex, at its closest only 15 km offshore and in about 1,000 metres of water.
While Golfinho-Atum reserves lie entirely within Area 1, Prosperidade reserves extend east into Area 4, where Eni operates. Eni has discovered the extension, named Mamba, and also has separate reserves. Following a successful appraisal well into the Coral field in late-February, which established reserves of 368bn cm, Eni raised its estimate for Area 4 reserves to 2,125bn cm of gas-in-place, of which 765bn cm lies entirely within the block.
The two operators signed an outline agreement in December under which they will carry out "separate yet coordinated" development activities, and will land the gas to a common LNG complex, initially with four trains but ultimately with 10, giving a capacity of 50m tonnes a year. The upstream development is not seen as particularly difficult or costly - flow-tests have indicated that production wells could flow up to 5.7m cm/d - but the LNG complex, to be built in an area with poor infrastructure, will be a very substantial undertaking.
The list of likely bidders for the interest includes Shell, which tried unsuccessfully to buy into the licence last year when Cove Energy was selling its 8.5% holding - after a bidding war, PTT won the stake for $1.9bn. ExxonMobil, PetroChina and India's ONGC are also said to be interested.
Scaling-up the $1.9bn paid by PTT, the 20.0% interest could be worth $4.5bn - although some in the industry say that sum is too much to expect for undeveloped upstream assets, with many uncertainties about the LNG complex. But others suggest the opportunity to gain a substantial position in a future LNG exporter of Mozambique's potential could be too tempting for an industry heavyweight to resist.