Eni SpA plans to sell 15% in natural gas field in Mozambique for $1.5 bn

Italian oil and gas major Eni SpA is looking to sell around 15 per cent stake in its lucrative Area 4 natural gas field in Mozambique for around $1.5 billion.

Talks between Eni and suitors including Chinese state utility Huadian have been dragging on due to differences over price, Reuters reported, citing industry and banking sources.

The sale talks come more than two years after state-controlled Eni sold 20-per cent of its controlling 70-per cent stake in this natural gas field to China's largest energy producer China National Petroleum Corp (CNPC) for approximately $4.2 billion. (See: CNPC acquires Eni's 20 % Mozambique gas stake for $4.2 bn)

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 is looking to sell assets worth around €8 billion ($8.8 billion) in the next five years in order to fund growth in new markets and help ring-fence dividends, the report said.

It plans to raise around a quarter of these proceeds from the sale of minority stakes in top acreage such as Mozambique, Congo and Ghana, without giving up operatorship, the report added.

With around 900,000 barrels per day, Africa represents more than 50 per cent of Eni's total oil and gas production, according to data on its website.

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, it will find it difficult to get that valuation today based on falling oil prices and surge in global LNG export capacity in Australia and Qatar and slowing demand.