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CNPC invests USD4.2bn to access Mozambique Gas

China National Petroleum Corporation (CNPC) has acquired a 28.57 per cent stake in ENI East Africa, owner of a 70 per cent interest in an offshore gas block in Mozambique.

With an investment of USD4.21bn, CNPC indirectly acquires a 20 per cent stake in Area 4 in Rovuma natural gas basin.
The deal highlights growing trend of Asian majors to diversify and secure energy sources. CNPC is China’s largest oil and gas producer and supplier. The deal is CNPC’s largest overseas purchase ever, according to Bloomberg. It marks the entry of a Chinese major in the highly prospective natural province, adding to Asian interests in the Rovuma basin.
The Rovuma Basin, located in the north of Mozambique is divided into one onshore and six offshore blocks. CNPC targeted Area 4 has identified gas reserves of 75tcf (2.12tcm), more than total proved reserves of Norway 73tcf and Kazakhstan 66tcf. With the conclusion of CNPC-ENI deal, ENI will hold 50 per cent stake in the block, CNPC 20 per cent, KOGAS 10 per cent, Galp Energia 10 per cent and Nacional de Hidrocarbonetos de Mocambique (ENH) 10 per cent. Major discoveries were reported also in Area 1 developed by Anadarko-led consortium. The block is reported to have up to 60tcf of natural gas resources. The remaining areas have reported no discoveries yet. Malaysia’s Petronas holds 90 per cent in Areas 3 and 6.
Thailand’s PTTEP acquired Cove Energy for GBP1.22bn (USD1.8) after a bidding war with Royal Dutch Shell. Cove Energy held 8.5 per cent stake in Area 1 and 10 per cent stake in the onshore block. The acquisition was in line with PTTEP’s strategy to increase reserves and production volumes in order to support the increasing demand of Asian region including Thailand. The deal marked yet another Asian major’s entrance into highly prospective East Africa. Anadarko holds 36.5 per cent in Area 1, Mitsui 20 per cent, ENH 15 per cent, Bharat Petroleum 10 per cent, Videocon 10 per cent and PTTEP 8.5 per cent.
Asia accounts for about one third of exports from Africa. Asia primarily imports commodities from Africa and exports manufactured goods. Emerging Asian economies are estimated to have exported to Sub-Saharan Africa, including Mozambique, goods worth over US90bn and imported close to USD120bn in 2012. Asian investments in Africa are widely dispersed across countries and industries. Asian companies operated in resource extraction, energy, petroleum processing, telecoms, shipping and freight, banking and financial services, tourism, real estate and agriculture. Major companies from Japan, Korea, China, India, Thailand, Malaysia and other Asian countries operate in a variety of sectors. In July 2012, China offered USD20bn in concessional loans to African countries over three years. Africa and India aim to increase trade to USD90bn by 2015. The parties are reportedly discussing 250 projects worth USD30bn.

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