Anadarko Petroleum Corp. has agreed to sell part of its stake in Mozambique's deep-water Rovuma Basin natural gas field to India's Oil & Natural Gas Corp. (ONGC Videsh) for $2.64 billion.
In an effort to raise cash Anadarko has been trying to sell off some of its Mozambique assets for a few months. Following huge finds off the coasts of Mozambique, Tanzania, and Kenya, energy companies from around the world have been interested in buying into the area, however the quality of the reserves has kept prices very high.
The Rovuma Basin is estimated to contain between 35 and 65 trillion cubic feet of natural gas, and this sale has given it the highest value yet for any Mozambique natural gas project. Earlier in the year Royal Dutch Shell were negotiating the purchase of the stake, but pulled out at the end believing the price was too high.
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Al Walker, the Chief Executive Officer at Anadarko, stated that "this transaction demonstrates our continuing ability to create substantial value through exploration."
The money raised will be used to invest in projects in the US, which focus on unconventional oil formations in Colorado and Texas, and deep-water wells in the Gulf of Mexico.
Scott Hanold, an analyst at RBC Capital Markets, told the WSJ that Anadarko has a history of selling stakes in large projects that require years of work and large investments to begin production, in order to invest in projects that offer much faster returns.
Mozambique is viewed by ONGC Videsh as extremely important to India for the future, in terms of its ability to provide a strong supply of LNG to meet India's growing demand. This stake in the Rovuma Basin will be ONGC Videsh's second in Mozambique.
With the sale Anadarko's working interest in the project has fallen from 36.5% to 26.5%.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com More