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    Exxon Buys 25% of Mozambique Area 4 for $2.8bn


ExxonMobil has confirmed March 9 it is to buy, from Eni, a 25% indirect stake in the natural gas-rich Area 4 block offshore Mozambique.

by: Mark Smedley

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Exxon Buys 25% of Mozambique Area 4 for $2.8bn

ExxonMobil has confirmed March 9 it is to buy, from Eni, a 25% indirect stake in the natural gas-rich Area 4 block offshore Mozambique for $2.8bn.

Eni currently holds a 50% indirect share in the block through a 71.4% stake in Eni East Africa, which owns 70% of the Area 4 concession. The remaining stake in Eni East Africa is held by Chinese state CNPC.

Eni will continue to lead the Coral floating LNG project and all upstream operations in Area 4, while ExxonMobil will lead the construction and operation of LNG plants to be later developed onshore. Eni CEO Claudio Descalzi said on March 1 that such a split in operations might be agreed.

“This operating model will enable the use of best practices and skills within Eni and ExxonMobil with each company focusing on distinct and clearly defined scopes while preserving the benefits of a fully integrated project,” said Exxon’s March 9 statement. Eni's statement was broadly similar.

(Source: Eni)

Following completion of the transaction, Eni East Africa S.p.A. will be co-owned by Eni and ExxonMobil (each 35.7%) and CNPC (28.6%). The remaining 10% interests held in Area 4 by Mozambican state ENH, South Korea’s Kogas, and Portugal’s Galp Energia will remain unchanged.

Exxon said the acquisition will be completed, following satisfaction of a number of conditions precedent, including clearance from Mozambican and other regulatory authorities.

Eni clarified that the announcement does not, as yet, represent a final investment decision (FID) for the Coral floating LNG project. On March 1, Eni CEO Claudio Descalzi said partners expect that to be reached in 2Q2017, so some two years behind Eni's original mid-2015 FID target.

Both majors said the deepwater Area 4 block contains an estimated 85 trillion ft3 of gas (2.4 trillion m3) which is enough for a world-class LNG project in which the partners expect to invest tens of billions of dollars, working in close collaboration with the government and local communities.

Since mid-2016, it had been widely expected that the US supermajor would buy into Area 4, though many expected that Qatar Petroleum would partner it in the farm-in. Exxon and QP have an LNG marketing joint venture, Ocean LNG, although no role has for it has yet been spelt out in the statements.


Mark Smedley