MILAN — Eni, the Italian energy giant, on Thursday sold China National Petroleum Corp. a 20 percent stake in its natural gas project off the coast of Mozambique, its largest gas discovery to date.
The $4.2 billion deal, still subject to approval by the authorities in Mozambique, reduces Eni’s share of the estimated $50 billion it will cost to develop the gas field. Eni retains 50 percent of the project.
The other shareholders in the Area 4 prospect are Empresa Nacional de Hidrocarbonetos de Moçambique, which is government-controlled; Kogas, of South Korea; and Galp Energia, of Portugal, each with a 10 percent stake.
“It’s great early monetization on what is a world-class project and helps reduce Eni’s risk exposure to the area,” said Jason Kenney, an analyst at Santander.
The deal connects one of the planet’s biggest untapped gas resources with its fastest-growing gas consuming country. It could accelerate the onset of competition in Asian markets between East African and Australian supplies of liquefied natural gas, or L.N.G.
Analysts said the price, worth $2.10 to $2.25 per oil-equivalent barrel of reserves, was lower than some expectations, reflecting concerns about the direction of gas prices globally.
Royal Dutch Shell last year backed out of a deal to buy a stake in a neighboring gas block, Area 1, at $3 per barrel of oil-equivalent. Area 1 is owned by the U.S. oil exploration company Anadarko Petroleum and several other investors.
China National Petroleum Corp, known as C.N.P.C., is the country’s biggest energy company, and has gas and L.N.G. joint ventures with Shell in Australia, China and Canada. China is the world’s second-largest oil consumer, after the United States, and its growing demand for gas is the driver for most new L.N.G. projects around the world.
Eni said it had also signed an agreement with C.N.P.C. to develop the Rongchang shale-gas block in China. Eni already has shale-gas agreements in countries including Poland, Ukraine and Vietnam, and has a shale-gas agreement with Sinopec, another Chinese oil company.
Article source: http://www.nytimes.com/2013/03/15/business/global/china-buys-stake-in-african-gas-field-from-eni.html?partner=rss&emc=rss