Italian oil firm Eni has wrapped up long-running talks to sell a multibillion-dollar stake in its planned Mozambique LNG development to Exxon Mobil, two sources with knowledge of the matter said.
“The deal is done, but won’t be announced for several months at Exxon’s request,” one of the sources said.
Eni declined to comment, while a spokesman for Exxon said, “We do not comment on market rumors or speculation.”
The offshore gas reserves already discovered by Eni in Area 4 are large enough to need a giant land-based LNG export plant whose proximity to Asian and Middle Eastern growth markets makes it potentially a highly lucrative project.
But talks to bring in a technically savvy partner with deep pockets like Exxon have dragged on due to a difference over valuations in the light of falling oil and gas prices.
In 2013 Eni sold 20% of its Area 4 license to China’s CNPC for $4.2 billion, but since then oil and gas prices have come down by more than half.
However, last year Mozambique awarded Exxon three offshore exploration license blocks of its own, which sit to the south of Eni’s discoveries, giving a new dimension to development prospects.
“As you are aware, on October 28, 2015, Exxon was awarded three offshore blocks in Mozambique,” the spokesman for Exxon said.
“We look forward to further discussions with the Mozambique government on the development of a production-sharing contract for the blocks.”
Eni has been reluctant to sell too much of its 50% stake in the Area 4 permit where as operator it already has found 2.4 Tcm (85 Tcf) of gas.
But in recent weeks Eni CEO Claudio Descalzi has raised the possibility of it selling up to a 25% stake, up from the 10% to 15% previously on offer.
The two sources said after lengthy talks, Eni and Exxon have now agreed terms and “sealed” a deal that could give Exxon its desired operating stake in the onshore LNG export plant while Eni would retain control over the Area 4 gas fields feeding it.
Last week Descalzi reiterated Eni’s desire to remain operator for the gas fields.
“Our model is to remain and keep the operatorship or keep, in any case, a clear control on the asset—the asset that we discovered,” he told analysts.
While Eni will export gas as LNG from at least one floating offshore platform in the Coral Field development in Area 4, the main focus of work will be on the larger land-based plants.
The Coral Field will remain outside the scope of the deal with Exxon, the sources said, and Eni has earmarked LNG from the Phase 1 development of Coral to BP.
—Reuters
Recommended Reading
Hess: Pre-emption Provision Doesn't Apply to Buyout Deal With Chevron
2024-02-27 - Hess Corp. said on Feb. 27 that a pre-emption provision does not apply to its proposed $53-billion buyout by Chevron Corp. and it remains "fully committed" to the deal.
TotalEnergies Buys Majority Stake in Ecoslops Provence JV
2024-03-01 - TotalEnergies bought out its joint venture partner to become the sole shareholder in cleantech venture Ecoslops Provence.
Enterprise Buys Assets from Occidental’s Western Midstream
2024-02-22 - Enterprise bought Western’s 20% interest in Whitethorn and Western’s 25% interest in two NGL fractionators located in Mont Belvieu, Texas.
EnQuest Selling Stake in North Sea Golden Eagle Oilfield, Sources Say
2024-04-16 - EnQuest has struggled in recent years with high debt levels and a drop in profits after Britain imposed a 35% windfall tax on North Sea producers.
Chevron, Exxon in Dispute Over Hess Stake in Guyana Oil Block
2024-02-27 - Chevron’s $53 billion deal to buy Hess’ interests in the Stabroek Block offshore Guyana could be derailed as Exxon, CNOOC say they have first rights of refusal on the block’s interests.