CNPC acquires Eni's 20 % Mozambique gas stake for $4.2 bn

Italian oil and gas major Eni SpA confirmed yesterday that it is selling a 20-per cent stake in its Mozambique natural gas field to China's largest energy producer China National Petroleum Corp (CNPC) for approximately $4.2 billion.

Analysts say the acquisition signifies China's insatiable appetite for global energy resources to meet the requirements to secure its energy security to meet its rapidly growing economy.

Another Chinese oil major CNOOC Ltd recently completed its purchase of Canadian energy player Nexen for over $15 billion, in the country's largest ever acquisition of a foreign company (See: US regulators approve $15.1-bn Cnooc-Nexen deal).

Eni's subsidiary Eni East Africa, which currently holds a majority 70-per cent interest in the large offshore gas field named as Area 4, will sell the 28.6 per cent in the company representing 20 per cent interest in the gas field, withholding the remaining 50 per cent.

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

The gas discovery is believed to be Eni's largest with estimated reserves of around 75 trillion cubic feet. A final investment decision on the project, which includes building LNG shipment facilities, is expected by next year.

 ''CNPC's entrance into Area 4 is strategically important for the project thanks to the worldwide relevance of the new partner in the upstream and downstream sectors,'' Eni said.

Simultaneously, both the companies have signed a joint study agreement for cooperation for the development of China's Rongchang shale gas block.

The Rongchang shale gas block in the Sichuan basin in southwestern China covers an area of approximately 2,000 sq. km. The area is located close to main consumption markets in the country.

Exploration and production tests carried out in nearby blocks indicate the region's huge gas potential.

The transaction is subject to obtaining the required approvals from the government of Mozambique and other customary closing conditions.

China's reliance on natural has been growing rapidly in recent years. By 2015, import of gas is expected to cross 35 per cent of the country's total as demand compared with only 15 per cent in 2010.

According to industry experts, CNPC's Mozambique acquisition places Chinese companies at the forefront of the development of energy resources in East Africa.

Last year CNOOC agreed to partner with UK's Tullow Oil Plc and France's Total SA to develop Uganda's three oil exploration areas by spending over $10 billion in the country's nascent oil sector.

Separately, Indian oil and gas majors Oil and Natural Gas Corp and Oil India Ltd have jointly submitted a first-round bid for a 20-per cent stake in block 1 of Mozambique's Rovuma oil and gas field offered by US explorer Anadarko Petroleum Corp and Videocon Group, Reuters reported yesterday.