Stephen Jewkes Milan

Italian oil and gas major Eni opened up Mozambique’s gas riches to China yesterday when it agreed to sell a 20 percent stake in its giant Mozambique gas field to China National Petroleum Corporation (CNPC) for $4.21 billion (R39bn).

The deal, still subject to approval by the Mozambican authorities, will leave Eni with a 50 percent stake in the field, which is the Italian company’s biggest gas discovery.

“It’s great early monetisation on what is a world-class project and helps reduce Eni’s risk exposure to the area,” said Jason Kenney, an oil analyst at Santander.

The deal connects one of the planet’s biggest untapped gas resources with its fastest-growing gas consumer and could accelerate the onset of competition with Australian supplies of liquefied natural gas (LNG) for Asian markets.

State-owned CNPC is the parent of Hong Kong- and New York-listed PetroChina.

Eni, the biggest foreign oil producer in Africa, was expected to hold a strategy meeting later yesterday with analysts focusing on shareholder remuneration after a series of disposals in recent months.

Eni’s Area 4 prospect is in the same Rovuma reservoir as a field owned by US explorer Anadarko Petroleum and several other investors.

Anadarko and Indian tycoon Venugopal Dhoot are selling a 20 percent stake in the field known as Area 1.

Eni and Anadarko have said they planned to unite their neighbouring gas fields off Mozambique’s coast, boosting the development prospects of one of the world’s most significant new energy projects.

The Rovuma field holds about 150 trillion cubic feet (tcf) of gas, enough to supply Germany, Britain, France and Italy for 15 years.

Eni estimates gas in place in its prospect is about 75 tcf.

The Italian state-controlled major had previously said it was looking for partners to help fund the estimated $50bn it would take to bring the Mozambican offshore field to production.

Sources had said other US and European oil majors like ExxonMobil, Chevron, Royal Dutch Shell and Total had held talks about taking a stake in Eni’s Mozambican field.

But a deal with these larger companies might have threatened Eni’s ownership of a project that is crucial to its future.

Shell tried and failed earlier this year to buy a company that holds a stake in the Anadarko block. Thai group PTT eventually won the contest for Cove Energy with a $1.9bn bid after Shell backed away from a bidding contest.

The other shareholders in Eni’s Area 4 prospect are Empresa Nacional de Hidrocarbonetos de Mocambique, South Korea’s Kogas and Portugal’s Galp Energia, each with a 10 percent stake.

CNPC, China’s biggest oil company, already has gas joint ventures in place with Shell in Australia, China and Canada.

Eni has said it intends to build LNG terminals in Mozambique to ship the gas to energy-hungry markets in Asia, with China a key market.

China is the second-largest oil consumer and its state-owned energy firms have been aggressively expanding on the international stage as they look to secure energy supplies to feed the nation’s rapid growth.

Eni said it had also signed an agreement with CNPC to develop the Rongchang shale gas block in China. – Reuters