CNPC and seal $4.2bn Mozambique deal - FT.com

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March 14, 2013 3:16 pm Share Clip Reprints Print Email CNPC and Eni seal $4.2bn Mozambique deal By Leslie Hook in Beijing and Michael Kavanagh in London

China National Corp, the country’s largest oil company by production, COMPANIES VIDEOS has planted its flag in Mozambique’s huge offshore natural gasfields with a $4.2bn deal to acquire a 20 per cent stake in a key block operated by ’s Eni.

The deal marks CNPC’s first step into east Africa, one of the world’s most coveted new frontiers for gas exploration, as well as China’s biggest ever investment in overseas natural gasfields.

Paolo Scaroni, chief executive of the Italian oil group, described the alliance between the two companies as a key part of its plan to drive up production in Africa More and beyond.

ON THIS STORY Lex China gas “We are by far the largest producer in Africa – there’s Comment Beijing set to liberalise a lot more room for further agreements between us”, energy market said Mr Scaroni on Thursday. Cove founders reunite for new oil project The investment by CNPC, parent of publicly listed China becomes world’s top oil importer PetroChina, still leaves Eni holding a 50 per cent stake Health Air in smoking lounges in Mozambique’s Block 4 offshore licence. healthier than Beijing Mr Scaroni said the selling down of its Mozambican ON THIS TOPIC interests would dilute Eni’s commitment to funding a CNPC close to Afghanistan oil deal project he estimated could require $50bn to allow China group’s Cuba oil deal LNG exports to Asia from his own block and a

IN OIL & GAS neighbouring one operated by Anadarko of the US. Bowleven to develop Cameroon gasfield “This kind of deal shows how careful we are not to Anadarko finds ‘potentially giant’ have eyes bigger than our stomach,” he said. oilfield BG set to strike $20bn deal in Mozambique’s location makes it an ideal potential India source of shipments into China. Cairn adds Senegal to exploration list China’s domestic demand for natural gas has been soaring as Beijing works to promote consumption within China and boost gas imports to replace more polluting fuels such as coal.

http://www.ft.com/intl/cms/s/0/f5b37248-8ca8-11e2-8ee0-00144feabdc0.html#axzz2O5qxHtq4[3/20/2013 10:57:59 AM] CNPC and Eni seal $4.2bn Mozambique deal - FT.com

CNPC’s contribution to funding the construction of LNG plants could allow the companies to start exporting liquefied gas from Mozambique by the end of the decade.

“China is a logical partner,” said Gordon Kwan, head of energy research at Mirae Asset Securities in Hong Kong. “Anadarko and Eni just want to make sure there is enough financial support for the development of the field.”

CNPC and Eni also announced a co-operation agreement for exploration in the Rongchang block in China’s southern Sichuan province. The two companies remain in discussion over reaching a production sharing agreement for the block.

China has been trying to replicate US success in developing shale gas production but so far its shale projects have had little commercial success. EDITOR’S CHOICE The deal with Eni is the latest in a global buying spree by China’s state-owned oil companies, including deals such as Cnooc’s $18bn acquisition of Nexen, a Canadian JOHN KAY ENTREPRENEURSHIP energy company, which was announced in July 2012.

Previous natural gas deals include PetroChina’s A$3.5bn joint acquisition, with

Royal Dutch Shell, of Arrow Energy in 2010. ©Rosie Hallam On the brink of a shadow Partners since childhood: The $4.2bn due to be paid by CNPC forms part of a €10bn disposal target set by drink industry business with siblings Eni to help improve its balance sheet to help finance further exploration and development projects. HIGHLIGHTS Disposals of remaining stakes held in , Italy’s gas distribution network, and ANALYSIS REVIEW FT JOBS Galp, the Portuguese oil company, are expected to take Eni close to meeting this target.

Mr Scaroni, in a strategy update presented to analysts beyondbrics in London on Thursday, added that persistently high oil prices could allow for a decision to return funds to Grasp the implications of New Executive level job shareholders later this year following its disposal global events board programme.

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http://www.ft.com/intl/cms/s/0/f5b37248-8ca8-11e2-8ee0-00144feabdc0.html#axzz2O5qxHtq4[3/20/2013 10:57:59 AM] CNPC and Eni seal $4.2bn Mozambique deal - FT.com

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http://www.ft.com/intl/cms/s/0/f5b37248-8ca8-11e2-8ee0-00144feabdc0.html#axzz2O5qxHtq4[3/20/2013 10:57:59 AM]