ExxonMobil takes stake in Eni’s block off Mozambique for $2.8B

Oil major ExxonMobil and the Italian oil company Eni have signed a sale and purchase agreement to enable ExxonMobil to acquire from Eni a 25 percent indirect interest in the natural gas-rich Area 4 block, offshore Mozambique.

Eni currently holds a 50 percent indirect share in the block through a 71.4 percent stake in Eni East Africa, which owns 70 percent of the Area 4 concession.

In a joint statement launched on Thursday, the duo said that the agreed terms include a cash price of approximately $2.8 billion. The acquisition will be completed following satisfaction of a number of conditions precedent, including clearance from Mozambican and other regulatory authorities, the company noted.

Eni Chief Executive Officer Claudio Descalzi said, “This deal represents material evidence of our exploration strategy based on the early monetization of our exploration discoveries, as a part of our ‘dual-exploration’ model. Through this strategy, Eni has been able to cash in more than $9 billion in the last four years. Moreover, the agreement confirms the world class quality, production potential, technical and financial robustness of the entire project.”

Darren W. Woods, chairman and chief executive officer of ExxonMobil, said the asset is a major addition to the company’s global development portfolio.

“This strategic investment will enable ExxonMobil’s LNG leadership and experience to support development of Mozambique’s abundant natural gas resources,” said Woods.

According to the statement, Eni will continue to lead the Coral floating LNG project and all upstream operations in Area 4, while ExxonMobil will lead the construction and operation of natural gas liquefaction facilities onshore.

“This operating model will enable the use of best practices and skills within Eni and ExxonMobil with each company focusing on distinct and clearly defined scopes while preserving the benefits of a fully integrated project,” the companies said.

Following completion of the transaction, Eni East Africa S.p.A. will be co-owned by Eni (35.7 percent), ExxonMobil (35.7 percent) and CNPC (28.6 percent). The remaining interests in Area 4 are held by Empresa Nacional de Hidrocarbonetos de Mozambique E.P. (ENH, 10 percent), Kogas (10 percent) and Galp Energia (10 percent).

Eni approved the investment plan for the Coral South FLNG project off  Mozambique last November. Eni’s move was followed by Mozambique’s state-owned energy firm ENH, also in November. The plan of development foresees the drilling and completion of 6 subsea wells and the construction and installation of a Floating LNG facility, the capacity of which will be around 3.4 MTPA.

The deepwater Area 4 block contains an estimated 85 trillion cubic feet of natural gas, which will provide resources for a world-class liquefied natural gas project, in which the partners expect to invest tens of billions of dollars.

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