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Exxon & Qatar Petroleum Looking for Assets in Mozambique?

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ExxonMobil Corporation (XOM - Free Report) and Qatar Petroleum have joined forces to search for energy assets in Mozambique, per sources familiar with the matter.

Mozambique houses some of the biggest natural-gas discoveries in a generation. The area includes Area 1 discovery made by Anadarko Petroleum Corporation (APC - Free Report) and Eni SpA’s (E - Free Report) discovery in Area 4, both in the Rovuma Basin. Both these companies intend to export the gas as LNG but have not reached the final investment decision.

Per the sources, both ExxonMobil and Qatar Petroleum are contemplating farming in to gas fields owned by Anadarko and Eni. However, no final decision has been taken yet.

The discoveries made offshore the northern coast of Rovuma Basin have drawn interest from oil companies in Europe, the U.S. and China. This is mainly because the Mozambique is planning one of the world’s largest liquefied natural gas projects.

ExxonMobil and Qatar Petroleum have enjoyed a long-standing relationship with several collaborations over the last 15 years. Hence, the latest investment jointly made by the two companies is likely to infuse the much needed funds for development along with a tax windfall to a nation struggling with a intensifying debt crisis.

None of the companies disclosed any detail with respect to these developments.

ExxonMobil’s partnership with Qatar also includes the RasGas, which produces and liquefies gas from Qatar’s North field, and the Golden Pass LNG terminal in Texas.

ExxonMobil won three offshore exploration licenses in Oct 2015 for blocks lying south of the Anadarko and Eni discoveries and thus, already has a presence in Mozambique. The U.S. oil giant also has a working interest in Statoil ASA’s Block 2 in Tanzania, north of the Rovuma Basin.

ExxonMobil’s acquisition of an equity interest in Anadarko’s Area 1 is likely to generate capital gains tax of about $1.3 billion for the Mozambique government. This will lend a huge support to the country that is struggling to balance its books after $1.4 billion of hidden debt was disclosed in April, which led to the World Bank and other donors to suspend aid.

ExxonMobil holds a Zacks Rank #2 (Buy).
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