Bloomberg News

Eni Says ‘Giant’ Gas Discovery Off Mozambique Is Its Largest

October 20, 2011

(Updates with closing share prices in fourth paragraph.)

Oct. 20 (Bloomberg) -- Eni SpA, Italy’s biggest oil company, found natural gas off Mozambique in a field that may hold enough to supply the U.K. for more than four years and would be the explorer’s largest operated discovery.

Eni made the find with the first exploration well in Area 4 in which it has a 70 percent stake, it said in a statement in Milan. Galp Energia SA, Korea Gas Corp., and ENH each have a 10 percent stake in the area. The well is located under 1,585 meters (5,200 feet) of water and encountered 212 meters of continuous gas pay.

“The resource potential assessed with the first exploration well makes it the largest operated discovery in the company’s exploration history,” Eni said in the statement. “The exploration success in Mozambique expands the leadership of Eni in Africa by opening a new eastern front of activities.”

Eni rose 0.6 percent to the highest since July to close at 15.82 euros in Milan. Galp rose 2.8 percent in Lisbon. The benchmark Stoxx Europe 600 Index fell 1.5 percent.

The block may hold at least 15 trillion cubic feet of gas, equivalent to about 340 million metric tons of the fuel, Eni said. The company will drill to a depth of 5,000 meters, after which the rig will move to a second well in the prospect.

The size of the discovery will lead to a large-scale development that will produce liquefied natural gas for export, Eni said. LNG production will likely start by 2020, Sanford C. Bernstein & Co. analyst Oswald Clint said in a research note.

--With assistance from Sungwoo Park in Seoul. Editor: Stephen Cunningham

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net


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