Anadarko Considers Selling Mozambique Gas Assets To Exxon Mobil

Exxon Mobil

(2015-04-20) US group Anadarko Petroleum is studying the possible sale of natural gas assets in Mozambique with Exxon Mobil and Qatar Petroleum having expressed interest in the deal, according to a report from the Reuters news agency.

The agency cited banking and industry sources as saying that the Anadarko Petroleum group may sell the entire 26.5 percent holding in the Area 1 concession of the Rovuma basin in northern Mozambique, where it discovered deposits of about 75 trillion cubic feet of natural gas.

The group, which initially held 36.5 percent of the concession area, in 2013 sold a portion of 10 percent to Indian state group Oil and Natural Gas Corporation (ONGC) for US$2.64 billion.

The group planned to build a natural gas liquefaction unit in Palma, Cabo Delgado province, exporting the final product to countries in Asia, including India, China and Japan.

Earlier this month, John Peffer, Anadarko’s director in Mozambique, announced that sales contracts would be signed soon and this that would make it possible to kick off the project for natural gas extraction and processing.

Peffer also said that final investment decision depends on the conversion of non-binding agreements into binding ones that the Anadarko Petroleum group has closed to export 8 million tons of natural gas per year to customers in Japan, China, Thailand and Singapore.

Exxon Mobil_1

Cited on Reuters report “a banker” stated that the Rovuma Basin Area 1 “is a $100 billion development that needs developers with significant cash,” referring to the full long-term costs of developing the initial liquefaction plant as well as future planned capacity expansions.

“The Mozambique government realizes now that it needs to get a top player because if they get it wrong, the project can be delayed by five years,” the same source would have added.

Based in Irving Texas, the success of Exxon Mobil in starting up its remote Papua New Guinea LNG export plant last year ahead of schedule and its subsequent rapid ramp-up may make it a desirable partner for Mozambique because, according to the referred source, the country “also lacks much basic infrastructure.”

As for Qatar Petroleum’s position, the reports points out that “government restrictions capping production from Qatar’s giant North Field, which feeds the country’s LNG production facilities, leave QP little choice but to expand abroad if it wants to maintain its top position.”

Qatar is presently the world’s biggest LNG exporter but is facing tough competition from Australia, which is “set to overtake it as the number 1 producer of this decade,” and the United States “where booming supply has prompted several LNG export schemes.”

Plummeting oil prices may have pushed Anadarko to review its Rovuma basin LNG assets, one of Reuters sources commented.

However, at this point, it is not clear whether the Houston-based firm is actually in a hurry to reach a deal or if it merely plans to offload its full stake.

The whole speculation must also keep in sight the fact that, since the sale of 10 pct of its reserves to India’s ONGC for US$2.64 billion in 2013, oil and gas prices have simply plunged.

None of the three cited companies wished to comment on the matter.

source: Reuters

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