Shell’s Cove bid could start East African gas race

cove-energy-logoRoyal Dutch Shell’s US$1.6bn bid for Cove Energy could spark a contest to develop natural-gas fields off Mozambique’s Indian Ocean coast

Winning Cove would give Shell an 8.5 per cent stake in a block where Anadarko Petroleum has found 30 tcf of gas, according to Bloomberg. Italy’s Eni has discovered even more in a neighbouring area. Together, there is sufficient fuel for the development of two US$20bn liquefied natural gas plants to supply customers in Asia, according to Deutsche Bank AG.

“We’re a natural partner in that project,” Shell Chief Executive Officer, Peter Voser, said in a recent interview. “We are the global leader in LNG, so this is an interesting province for us to actually further grow.”

(Source: Cove Energy)(Source: Cove Energy)Other companies will also be looking for a way into Mozambique. India’s Oil & Natural Gas Corp. was among Asian producers considering a bid for Cove and a counter-offer remains possible. At the same time, Eni and Anadarko have both said they’re willing to sell stakes in their discoveries.

“This move from Shell leaves other European majors behind,” Alejandro Demichelis, a London-based analyst at Bank of America Corp, was quoted as saying, adding that BP and Total are likely to want a role in Mozambique.

Shell, ExxonMobil and BP, which had also reportedly considered a Cove bid are the biggest LNG producers among international oil companies. Shell itself is unlikely to settle for Cove’s 8.5 per cent stake in Anadarko’s Rovuma fields and has said that it is “assessing opportunities” to expand in Mozambique.

Cove is “too small for a company the size of Shell with ambitions and expertise in operating large scale LNG developments,” Demichelis said.

Tanzania, Mozambique’s northern neighbour, also has the potential to support LNG projects. BG Group Plc has already found about four tcf of gas there and Ophir CEO, Nick Cooper, said last month the geology that yielded Mozambique’s discoveries may extend across the border. Cove also has exploration rights.

Anadarko’s Rovuma discoveries and Eni’s neighbouring Mamba find, together contain 70 tcf. Both companies plan more appraisal wells. CEO Paolo Scaroni said Eni was willing to sell part of the field. Anadarko, which has no previous experience in LNG, has also reportedly said it may dispose of part of its Mozambique holding.

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
T: +44 20 7834 7676, F: +44 20 7973 0076, W: www.alaincharles.com

twn Are you sure that you want to switch to desktop version?