Four of the five largest oil and gas discoveries in the world this year have been made off Mozambique, including three earlier finds by Eni, according to the consultants Wood Mackenzie in Edinburgh. These discoveries have the potential to put Mozambique, which previously had little oil and gas production, in the gas-exporting big leagues with countries like Qatar and Australia.
Although Eni is ranked about eighth among Western oil companies in terms of output, with about 1.7 million barrels a day — about half the size of BP or Royal Dutch Shell — the company is a big natural gas player in Europe. And Eni is emerging as a leader in Mozambique exploration.
The newest finds, from the sixth and seventh wells that Eni has drilled there, add an additional six trillion cubic feet of gas to what the Italian company has already found. That is a large amount of gas but relatively incremental. It raises the total to 68 trillion cubic feet that Eni now says it has found in its Mozambique exploration concession, called Area 4, where Eni has a 70 percent shareholding.
Three other shareholders — Galp Energia of Portugal, Kogas of South Korea and ENH, Mozambique’s national oil company — each hold 10 percent.
The total amount discovered is equivalent to about 12 billion barrels of oil. A high proportion of the gas is likely to be recoverable, Eni said.
According to Eni’s estimates, its share of the Mozambique discoveries so far could be worth around $15 billion.
The Eni finds coincide with an effort by the company’s chief executive, Paolo Scaroni, to focus more on exploration and production, and less on transmission of natural gas in Italy. When a company makes a business of exploration and is successful, he said, “you make a huge amount of money.”
Eni first found gas in Mozambique last year, not long after a discovery by Anadarko Petroleum of the United States, which is now Eni’s main competitor in the region.
The two companies are negotiating with the government on a development plan.
The most profitable market for the Mozambique gas is likely to be exports to Asia as supercooled liquefied natural gas, or L.N.G., on special ships. The Web site of the Instituto Nacional de Petróleo, the country’s energy regulator, has a presentation that indicates that as many as 10 L.N.G. conversion plants could be built, which would make Mozambique a significant player in the world gas market.
Mr. Scaroni said there could also be a role for an offshore floating conversion plant, a technology that Royal Dutch Shell is now developing for use off Western Australia. Shell recently tried to buy Cove Energy, which had a small position in the Mozambique discoveries, but was outbid by PTT Exploration and Production of Thailand.
Eni is not a big player in liquefied natural gas and may need help with the huge capital costs for developing the gas, which Mr. Scaroni put in the “tens of billions” of dollars.
Because Anadarko is not a liquefied natural gas specialist either, it is widely thought in the industry that both companies will bring in partners.
Mr. Scaroni said he had been talking to potential partners “but we are fairly reluctant to strike a deal with anybody until we finish our exploration.”
A recent report by Bernstein Research says that Mozambique would be “Eni’s most significant project, although we do not expect production until 2019 at the earliest.”
The gas discoveries off Mozambique are contained in sandstone deposits in what were ancient river canyons, similar to those off West Africa and elsewhere.
What makes the Mozambique discoveries particularly rich is that the sandstone layers containing the gas are thick — as much as 300 meters, or nearly 1,000 feet — indicating sizable reserves.
“Mozambique is a very positive exploration story,” Mansur Mohammed, a Wood Mackenzie analyst, said. “We are talking about an unprecedented high exploration success rate that transformed the outlook for the region.”
This article has been revised to reflect the following correction:
Correction: December 5, 2012
An earlier version of this article misspelled the first name of ENI’s chief executive. He is Paolo Scaroni, not Paulo.
Article source: http://www.nytimes.com/2012/12/06/business/energy-environment/eni-announces-major-gas-find-off-mozambique.html?partner=rss&emc=rss