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Italian energy major Eni SpA (E - Analyst Report) and state controlled China National Petroleum Corporation ("CNPC") are locked in discussions for the proposed sale of a stake in a Mozambique gas project, as per Bloomberg reports.

The talks between the companies are underway for the past six months. The deal involves divestment of around 20% stake in Eni-operated gas block, which could fetch as much as $4 billion. It is believed that CNPC and a listed arm PetroChina are likely to be the contenders to the stake in the Mozambique block. However, both the companies have not revealed any details so far.

Eni has achieved immense success in Area 4 off Mozambique. Apart from the several high-impact gas discoveries made by the Italian company, it recently added another 4 trillion cubic feet (Tcf) of gas in place within the Mamba Complex, in Area 4, offshore Mozambique. The latest find strengthens Eni’s position in the area and the company intends to make steady progress with the development plans for this huge gas reserve base.

Lately, PetroChina also emerged as a contestant to farm in a 20% stake in the Rovuma gas discovery off the country from the US independent Anadarko Petroleum Corporation (APC - Analyst Report) and India’s Videocon Industries. Other competitors likely to bid for the deal comprise ExxonMobil Corporation (XOM - Analyst Report) as well as a consortium of Royal Dutch Shell plc (RDS.A - Analyst Report), India’s state-owned Oil & Natural Gas Corporation and Oil India. The deal is pegged at about $4.5 million.

Mozambique’s offshore gas reserves have received a boost from the recent finds in the region and it is estimated to hold reserves of about 150 Tcf.  A regional liquefied natural gas (LNG) project as well as discoveries in Area 4 are likely to be commissioned in 2018, further enhancing the productivity of the region.

Eni carries a Zacks Rank #4, which is equivalent to a short-term Sell rating.

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