Mozambique’s state-backed petroleum company is considering selling a stake valued at about $2 billion in the Rovuma offshore gas field as the country seeks to bolster public finances, said three people familiar with the matter.
India’s Oil & Natural Gas Corp. (ONGC) and Oil India Ltd. (OINL) are among companies weighing bids for a stake in Rovuma owned by Empresa Nacional de Hidrocarbonetos, said one of the people, who asked not to be identified as the deliberations are private. ENH, which owns 15 percent of the Rovuma-1 block, is also gauging interest from Chinese energy firms, two of the people said.
ONGC and Oil India, state-owned companies that are working together, might pursue ENH’s holding should separate talks to buy a stake in Rovuma-1 from Anadarko Petroleum Corp. (APC:US) fail, one of the people said. Discussions are at an early stage and ENH may opt to meet capital commitments to the project through a financing deal rather than a sale, two other people said.
Mozambique has become one of the world’s top destinations for energy investment as companies including Anadarko and Eni SpA seek partners to develop the country’s offshore gas reserves. Mozambique may have 250 trillion cubic feet of gas reserves, according to ENH.
China National Petroleum Corp., China’s largest oil producer, earlier this year agreed to buy a 20 percent stake in part of the Rovuma project for $4.2 billion from Eni. (ENI)
Anadarko and Videocon
ONGC and Oil India are the leading joint bidders for a 20 percent stake that Anadarko and Videocon Industries Ltd. (VCLF) are selling in the Rovuma-1 block for $5 billion to $6 billion, people familiar with the matter said in April. The Indian group’s talks with Anadarko have stalled amid disagreements over terms, two people with knowledge of the process said, adding that the parties are still in discussions. Anadarko and Videocon are each trying to sell a 10 percent stake in the block.
Officials at ENH, ONGC and Oil India didn’t return calls seeking comment on the talks. Brian Cain, a spokesman for Anadarko, declined to comment. ENH also owns 10 percent of the Area 4 field in which CNPC bought a stake from Eni.
Mozambique’s Indian Ocean coast holds fields that could be rich enough to meet global gas demand for two years, sparking interest from Asian energy firms. The reserves of the Rovuma-1 block are larger those of Libya, according to data from The Woodlands, Texas-based Anadarko, the operator of the block.
“In this industry, partnership is key because the amount of investment required is huge and the possibility of sharing risk is a huge advantage,” Eni Chairman Giuseppe Recchi said today in an interview in Chengdu at the Fortune Global Forum.
The scale of the reserves means significant spending by the blocks’ owners will be needed to construct export infrastructure. Building the necessary rigs, pipelines and export terminals could require $50 billion in investment, Mozambique’s mining minister said last year.
The east African country, with a per capita gross domestic product lower than that of Rwanda, has limited experience managing large-scale resource projects and is still building key ports and railway links. Rio Tinto Group (RIO) earlier this year wrote down 70 percent of its investment in Mozambique’s coal sector because of insufficient transport capacity and a drop in coal prices.
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