Shell has started discussions with Anadarko Petroleum over a bid for the US independent’s gas assets in Mozambique, according to a report.
Europe’s biggest oil company has begun informal talks with Anadarko about a deal for some or all of its 36.5% stake in the Rovuma-1 offshore gas fields, people familiar with the situation told Bloomberg.
Anadarko, however, is reluctant to sell before further results of exploration in the area are known, the unnamed sources told the news wire.
Anadarko has not begun a formal auction process for the stake, which could fetch about $8 billion based on the price Thai energy company PTT Exploration & Production offered for the UK’s Cove Energy, which holds 8.5% of the same fields, Bloomber reported.
Shell this week dropped a plan to buy Cove after that company’s shares more than doubled in a bidding war with PTTEP.
“Big Oil certainly see significant resource potential out of East Africa, with Mozambique today offering the largest prize,” said Theepan Jothilingan, an oil analyst at Nomura Holdings.
“It will be advantageous if you have one of them coming in on the development of the liquefied natural gas project, and from that perspective Shell fits the bill. Anadarko will look to scale down at the right price.”
Officials at Shell and Anadarko declined to comment on any possible discussions, Bloomberg said.
Anadarko shares were up early in the day on Thursday, hitting a high of $73.37 on the New York Stock Exchange before falling sharply around midday. They recovered again to close near flat at $72.59.
Though Shell baulked at Cove’s price, it may willing to pay a premium for Anadarko’s larger stake because it would give Shell the opportunity to take on the operatorship of the block from the US company and lead the fields’ development, the people told Bloomberg.
A Shell deal for Rovuma-1, where an Anadarko-led group has found natural gas equal to as much as six times the UK’s existing reserves, would bring the Anglo-Dutch supermajor’s capital and expertise to bear on a complex energy project.
The partners in the fields, which include India’s Bharat Petroleum and Videocon Industries, will have to meet the cost of building an LNG terminal to allow exports to Asia.
Those companies’ stakes could also be attractive to Shell as it looks to build its position, one of the people told Bloomberg.
Mozambique will need $50 billion in investment over the next decade to develop its natural-gas industry, the mining minister said earlier this year.
Source: Upstream Online