Anadarko Tags Mozambique Offshore Development, LNG Facility at $15B
Houston-based oil company Anadarko Petroleum Corp. said Wednesday it is in talks with Italian energy major ENI SpA to build a liquefied natural gas plant in Mozambique as part of a plan to jointly develop their recent major gas discoveries off the East African country's coast.
Large natural gas discoveries since late 2011 off the coasts of Mozambique, Tanzania and most recently Kenya have transformed East Africa into one of the world's most promising energy provinces, potentially challenging Qatar and Australia for key export markets in Asia.
"We are in talks with ENI about combining efforts both on the offshore development and on building a liquefaction facility onshore," Scott Moore, Vice President of Marketing, told Dow Jones Newswires.
Earlier this year an Anadarko official said there had been discussions with ENI on possibly working together in Mozambique, but he didn't give details.
The gas discoveries have already led to jostling between companies eager to invest in the region, including Royal Dutch Shell PLC, which recently lost out to Thailand's PTT Exploration and Production PCL in a bid to take over Cove Energy PLC, which has a stake offshore Mozambique.
After the most recent discovery in June, Anadarko said the high-end estimate for total gas in the Rovuma-1 find is approaching 100 trillion cubic feet. A consortium led by Anadarko plans to bring the gas to shore, where it will be liquefied and shipped to Asian and other markets.
The total cost of offshore development and construction of a new two-train liquefied natural gas terminal is estimated at around $15 billion, said Mr. Moore, who was speaking on the sidelines of a conference in Singapore.
A final investment decision is expected next year, with the first LNG possibly hitting the market in 2018.
The Anadarko discovery is located close to another huge reserve found by ENI. The Italian company says it had discovered close to 70 trillion cubic feet of gas in the region, of which 50 trillion are part of the same geological structure as the Anadarko discovery.
An ENI spokeswoman confirmed talks are ongoing with Anadarko on joint offshore development, but declined to comment on the possibility of teaming up with the U.S. company to build the onshore LNG facility.
The commercial pacts are currently being agreed between the two companies, Mr. Moore said, adding that "we see ourselves as staying on as operator of the project." An ENI spokeswoman said it's premature to talk about the operatorship of a combined project.
ENI is one of the biggest operators in Africa, with production on the continent at around 1 million barrels of oil equivalent a day.
ENI Chief Executive Paolo Scaroni earlier this year described Mozambique as a potential game-changer and said the company will look at "strategic alliances" for the project. A final investment decision is expected by the end of next year, he said.
Anadarko--which is an operator in the Offshore Area 1 with a 36.5% interest--has also said there's interest from many potential partners seeking a stake in its Mozambique assets.
Current partners in the project are Mitsui Corp. Ltd., Bharat Petroleum Corp. Ltd., Videocon Industries Ltd., Cove Energy and Empresa Nacional de Hidrocarbonetos, Mozambique's national oil company.
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