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    Exxon to Finalise Rovuma LNG: Press

Summary

The US major is meanwhile looking to prune its Asia-Pacific portfolio of mature assets.

by: Joseph Murphy

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Natural Gas & LNG News, Asia/Oceania, Liquified Natural Gas (LNG), Premium, Corporate, Mergers & Acquisitions, Import/Export, News By Country, Mozambique

Exxon to Finalise Rovuma LNG: Press

ExxonMobil plans to finalise an LNG export project off the coast of Mozambique in a ceremony on October 8, the country’s mineral resources and energy ministry said on October 5, according to Bloomberg.

The two-train Rovuma LNG complex will produce up to 15.2mn mt/yr of LNG for export at full capacity, making it larger than the 12.88mn mt/yr project France’s Total is implementing off Mozambique. Production should start up in 2024, Exxon said last year. The US major is partnered at the project with Italy’s Eni.

As Exxon advances Rovuma LNG and other large-scale greenfield developments, it is looking to prune its Asia-Pacific portfolio of smaller mature projects as part of a plan to divest $15bn of assets by 2021.

“ExxonMobil holds several mature assets in Australia, Thailand and Malaysia, with large abandonment liabilities looming. The Asia Pacific portfolio also includes large-scale, but low return, and early-life, but low margin, resources in Vietnam and Indonesia,” Wood Mackenzie research director Andrew Harwood wrote in a research note published on October 6. “Divesting these assets would result in a more focused, higher-margin portfolio, centred on Papua New Guinea (PNG) and the non-operated Gorgon LNG project.”

The top divestment targets include Exxon’s 50% and 32.5% stakes respectively in the Bass Strait joint venture and Kipper projects in Australia. It may also quit its gas producing-sharing contracts (PSCs) in Malaysia, where it has a 50% share, and its EPMI PSC in the country, where it has a 78% holding. It is set to withdraw from Thailand, Vietnam and Indonesia completely. Its Thai operations include a 10% interest in the Sinphuhorm project and an 80% share in the Nam Phong project. It also owns a 63.75% share in the Cai Voi Xanh development in Vietnam and 50% of the Cepu project in Indonesia.

Divesting these assets and concentrating in the Asia-Pacific area on PNG and the Gorgon LNG should improve Exxon's production compound annual growth rate (CAGR) in the region from -3% to +3%, WoodMac estimated.

“However, the bigger challenge facing ExxonMobil is availability of buyers,” the Edinburgh-based consultancy said.

“The majors have more than $70bn of assets up for sale, so there is clearly no shortage of supply for potential buyers. In addition, recent M&A activity in Asia Pacific has been dominated by a handful of regional national oil companies such as PTTEP, and local players, the likes of Medco Energi and Santos,” it continued. “It remains to be seen if these players still have the financial capability to support further acquisition ambitions.”

Harwood suggested that private equity might “make a meaningful dive into the upstream market in Asia”, after several failed attempts in recent years.