Bloomberg News

Total Said Among Buyers for Eni’s $2.6 Billion Africa Gas Stake

March 09, 2012

A Total SA logo is seen at a gas station in Paris. Photographer: Antoine Antoniol/Bloomberg

A Total SA logo is seen at a gas station in Paris. Photographer: Antoine Antoniol/Bloomberg

Total SA (FP) is among oil producers and utilities interested in buying a 20 percent stake in Eni SpA (ENI)’s gas discovery off Mozambique, according to people with knowledge of the matter.

Total, France’s largest oil explorer, is one of at least eight companies that have expressed an interest, one of the people said, declining to be identified because the talks are preliminary. Eni plans to sell a 20 percent stake in the Mamba find when an appraisal drilling program is complete next year, another person said.

The field, where Eni currently has a 70 percent interest, holds more than 30 trillion cubic feet of fuel, equivalent to about 765 million tons of oil equivalent. A 20 percent holding may be valued at $2.6 billion, according to Mediobanca SpA.

Spokesmen for Rome-based Eni and Paris-based Total declined to comment.

“We see the opportunity to offload capital risk as potentially quite lucrative for Eni, with any additional partner paying well,” said Jason Kenney, an analyst at Banco Santander SA in Edinburgh. “Well testing implies phenomenal flow rates and very good reservoirs which can only be positive for possible development costs.”

Mozambique LNG

Eni last month forecast flow rates of about 4 million cubic meters a day for each well, enough to supply about 1 million U.K. households. Italy’s biggest oil company plans to invest about $50 billion to produce the first liquefied natural gas in 2018, Chief Executive Officer Paolo Scaroni said in December.

The partners, which include Korea Gas Corp. (036460), Portugal’s Galp Energia SGPS and Empresa Nacional de Hidrocarbonetos de Mocambique, plan to drill at least eight wells through next year to further evaluate the discovery about 45 kilometers (28 miles) from the coast of Cape Delgado.

“We have more than four structures -- three, four, maybe five structures,” Claudio Descalzi, Eni’s head of exploration and production, said last month. Next year “could be a good year to have the first final investment decision, at least for the first two structures.”

The Mamba resource may increase by as much as 50 percent to 45 trillion cubic feet after additional drilling, according to estimates from Jean-Charles Lacoste, an analyst at Credit Agricole Cheuvreux SA.

“Mamba raised a huge interest from everybody,” Scaroni said last month. The company has been approached by “almost everybody in the industry.”

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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