ExxonMobil acquires a 25% stake in Eni’s Mozambique offshore project
ExxonMobil (ticker: XOM) announced Friday that the company has purchased a 25% indirect interest in the natural gas Area 4 block offshore Mozambique from Eni (ticker: E) for $2.8 billion. Eni currently holds a 50% indirect share in the block through a 71.4% stake in Eni East Africa, which owns 70% of the Area 4 concession, according to a company press release.
Area 4 offshore Mozambique has 85 trillion cubic feet of gas in place, giving it enough reserves to supply Germany, Britain, France and Italy with gas for nearly two decades, according to Reuters. The gas from the concession will be processed through LNG terminals, giving the partners in the project access to high-demand markets in Asia.
Under the terms of the deal, Eni will continue to lead the Coral floating LNG project and all upstream operations in Area 4, while Exxon will lead the construction and operation of the LNG facilities onshore. The companies believe that this operating model will allow each to focus on distinct and clearly defined scopes while preserving the benefits of a fully integrated project.
“This strategic investment will enable ExxonMobil’s LNG leadership and experience to support development of Mozambique’s abundant natural gas resources,” said ExxonMobil Chairman and CEO Darren Woods.
Eni selling down interest in projects to fund their growth
Eni currently has billions of dollars of investments tied up in large-scale projects around the world, prompting the company to sell interest in many of its finds.
“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,” Eni CEO Claudio Descalzi said. “Through this strategy, Eni has been able to cash in more than $9 billion in the last four years.”
In 2013, Eni sold 20 percent of its Area 4 stake to China’s CNPC for $4.2 billion but since then oil and gas prices have come down sharply, making it difficult for the Italian company to sell interest in the project.
Eni previously estimated overall investments around $50 billion for the Mozambique project and had been in talks to bring on a technically-savvy partner like Exxon for months, but a deal was stymied by falling prices and differences of opinion on valuation. Eni wrapped up Friday’s deal last year, but withheld the announcement for several months at Exxon’s request, sources told Reuters.
