Mozambique Gas Stakes for Sale

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Twenty percent of a natural gas field off the coast of Mozambique has been put up for sale by Anadarko Petroleum and Videocon of India, according to Videocon’s chairman. 

Analysts estimate this sale could bring as much as $4.5 billion. The sale also has the potential to bring in a major industry player to provide expertise and capital as Mozambique’s energy resources are in desperate need of development. 

In the past three years, Anadarko and Italian energy company, Eni have found the richest abundance of gas in the offshore exploration of Mozambique.  Mozambique is on target for becoming a worldwide leading natural gas exporter, which would make it equivalent to Qatar and Australia.  The gas will be transported on specialty ships as a liquefied natural gas.  This is done by cooling the fuel into a liquid. 

Anadarko has 36.5 percent of a block called Area 1 and Videocon has 10 percent of Area 1.  Venugopal Dhoot (Videocon’s chairman) said, “I will try to get the maximum price.” Dhoot hired Standard Chartered and UBS to handle the sale. Al Walker (Anadarko’s chief executive) said the company is interested in selling only a 10 percent share and keeping 26.5 percent. An Anadarko spokesman refused to comment beyond that. 

Since Mozambique has little oil and gas infrastructure; developing the energy industry there will be expensive and difficult.  The two companies are hoping the sale will bring in one of the leading industry companies with L. N. G. experience, which is experience that both Anadarko and Eni lack. 

Marne Beukes, an African energy analyst at IHS, said, “Twenty percent is enough to attract the interest of majors like Shell and Exxon Mobil or even Petrochina.”  She suggested that the reason for the joint sale is to attract a big player. 

Shell was recently outbid by PTT Exploration & Production of Thailand for the purchase of Cover Energy, which holds an 8.5 percent stake in Area 1 in Mozambique. 

In December Anadarko and Eni agreed to jointly build a liquefaction plant in northern Mozambique.  However, partnering with a giant could help bring gas exports closer to reality. 

Analysts are expecting the 20 percent stake to sell for $4.5 billion. According to an analyst at Investec, the Cove deal will serve as a guide to the pricing of future deals. Eni values its total Mozambique stake at approximately $15 billion and the chief executive has stated that he is interested in exploring a stake sale in the future. 


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