ExxonMobil to buy 25% in Mozambique LNG project from Italy's Eni for $2.8 bn

US oil and gas giant, ExxonMobil Corp today struck a deal to buy a 25-per cent stake in Mozambique liquefied natural gas (LNG) development project, from Italy's Eni, for $2.8 billion in cash.

Eni currently holds a 50-per cent indirect share in the block through a 71.4-per cent stake in Eni East Africa, which owns 70 per cent of the Area 4 concession.

Post closing, Eni East Africa S.p.A. will be 35.7 per cent co-owned by Eni, 35.7 per cent by ExxonMobil and CNPC 28.6 per cent.

Other stakeholders of the Area 4 gas field include Mozambique's national oil and gas company Empresa Nacional de Hidrocarbonetos de Mocambique, Korea's Kogas and Portuguese energy group Galp Energia, each owning 10 per cent.

Eni will continue to lead the Coral floating LNG project and all upstream operations in Area 4, while ExxonMobil will lead the construction and operation of natural gas liquefaction facilities onshore.

''This strategic investment will enable ExxonMobil's LNG leadership and experience to support development of Mozambique's abundant natural gas resources,'' said Darren Woods, chairman and CEO of ExxonMobil.

''Our industry-leading project execution, advanced technologies, financial strength and marketing capabilities will help deliver reliable, affordable energy to customers and create long-term economic value for the people of Mozambique, project partners and ExxonMobil shareholders,'' he added.

The Area 4 natural gas discovery is believed to be Eni's largest with estimated reserves of around 75 trillion cubic feet, and once developed, will be able to fully meet Italy's gas requirement for around thirty years.
 
The first gas shipment from the development is expected in 2020, according to Claudio Descalzi, CEO of Eni.

The company, along with Anadarko Petroleum, which operates the adjacent Area-1 field, plans to build an Coral floating LNG export terminal, which includes a 2,5 Mtpa floating LNG unit in the Rovuma Basin this year.

The first stage of the project would involve construction and commissioning of two onshore LNG trains and the drilling of 16 subsea wells.

Although Eni sold a 20 per cent stake to CNPC for $4.2 billion in 2013, the valuation today is based on falling oil prices and surge in global LNG export capacity in Australia and Qatar and slowing global demand.