US giant ExxonMobil and Italy’s Eni signed a US$2.8 billion cash deal that will see ExxonMobil acquire 25% indirect interest in the natural gas-rich Area 4 block, offshore Mozambique.
Map of Area 4, from Eni.
Eni currently holds 50% indirect share in the block through a 71.4% stake in Eni East Africa, which owns 70% of the Area 4 concession. The deepwater Area 4 block contains an estimated 85 Tcf (2.4 Bcm) of natural gas, which will provide resources for a world-class liquefied natural gas project, in which the partners said they expect to invest tens of billions of dollars, working in close collaboration with the government and local communities.
The acquisition will be completed subject to satisfaction of a number of conditions precedent, including clearance from Mozambican and other regulatory authorities, the two companies said in a joint press release.
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 duo said.
Following completion of the agreement, Eni East Africa will be co-owned by Eni (35.7%), ExxonMobil (35.7%) and CNPC (28.6%). The remaining interests in Area 4 are held by Empresa Nacional de Hidrocarbonetos E.P. (ENH, 10%), Kogas (10%) and Galp Energia (10%).
“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,” Eni CEO Claudio Descalzi said.
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. “Our industry-leading project execution, advanced technologies, financial strength and marketing capabilities will help deliver reliable, affordable energy to customers and create long-term economic value for the people of Mozambique, project partners and ExxonMobil shareholders.”