LNG

Occidental Petroleum Corp., the largest acreage holder in the prolific Permian Basin and the winner of the bidding last year for Anadarko Petroleum, has entered into an agreement with US activist investor Carl Icahn and is taking three Icahn-designated directors onto its board.

TechnipFMC, the Franco-US energy and liquefied natural gas engineering company, said it was awarded a number of subsea contracts by Anadarko Petroleum, the licence holder of the Area 1 Rovuma Basin feed-gas resources for the Mozambique onshore LNG project.

The TechnipFMC contracts focus on the development of reserves in the Golfinho-Atum fields offshore the southeast African nation.

TechnipFMC was awarded a major contract for the engineering, procurement, construction and installation (EPCI) of the subsea hardware system through its wholly owned United Arab Emirates-incorporated subsidiary, Technip Middle East FZCO.

The company gave no specifics on the value of the Mozambique contract save to say it was worth more than $1 billion.

The onshore Mozambique project will have phase one output of almost 12.9 million tonnes per annum of LNG from two liquefaction Trains, as well as all necessary associated infrastructure, storage tanks and export jetty facilities.

Anadarko is proceeding with its Mozambique LNG commitments after agreeing earlier in 2019 to be taken over by US peer Occidental Petroleum, while its LNG assets will be sold to French major Total.

The TechnipFMC award followed the granting in May 2019 of the onshore engineering, procurement and construction contract valued at around $6 billion to a consortium comprising Saipem of Italy and its main partner McDermott International of the US, while Chiyoda Corp. of Japan will fill an advisory role.

The TechnipFMC subsea work will be carried out in cooperation with offshore vessel and platform owner and consortium partner Van Oord of the Netherlands and its Mideast subsidiary in cooperation with another European-based subcontractor, Allseas.

In support of these awards, TechnipFMC is increasing its presence in Mozambique and has had a new office in the capital Maputo since February 2019.

TechnipFMC has also been awarded separate contracts under its wholly owned US incorporated subsidiary, FMC Technologies Inc., to provide subsea hardware in support of well construction.

“We are extremely pleased to have been selected for the majority of the Mozambique LNG subsea scope,” said Arnaud Pieton, President of the Subsea division at TechnipFMC.

“TechnipFMC will highlight our industry leading subsea capabilities to help maximize Anadarko’s overall project value,” added Pieton.

“This award is a testament of our 25-year partnership with Anadarko and will further expand our presence in Mozambique,” he said.

Anadarko is still operator of the Mozambique project until the Occidental deal is completed and has a 26.5 percent stake and operatorship of the Area 1 reserves that underpin the LNG venture.

Other shareholders in the Area 1 licence and LNG project include the Japanese trading house Mitsui & Co. and three Indian companies, Bharat Petro Resources, ONGC Videsh and Oil India Ltd., as well as Thailand’s national energy company PTTEP and the Mozambique state-owned oil and gas firm ENH.

Occidental Petroleum, the Texas-based company competing with Chevron Corp. to take over Anadarko Petroleum for around $55 billion including debt, has had its revised offer endorsed by the Anadarko board, including the sale of its Mozambique LNG stake and other African assets to French major Total if the deal is finalized.

“Anadarko’s board of directors, in consultation with its financial and legal advisors, has unanimously determined that the revised acquisition proposal it received from Occidental Petroleum on May 5 constitutes a ‘Superior Proposal’ as defined in Anadarko's previously announced merger agreement with Chevron Corp.,” said Anadarko.

The US takeover target added that Chevron has four business days ending on May 10 to increase its offer in accordance with the terms of the Chevron Merger Agreement signed on April 12.

“If Anadarko terminates the Chevron Merger Agreement in order to enter into a definitive agreement with Occidental, Anadarko will pay Chevron a $1 billion termination fee as required by the Agreement,” explained Anadarko.

Occidental’s latest offer amounts to 78 percent cash and 22 percent in Occidental shares, rather than the previous 50-50 split.

The bid is valued at around $38Bln versus $33Bln for the Chevron offer. In addition, the winning bidder would have to assume around $17Bln of Anadarko debts.

In connection with Occidental’s proposal to acquire Anadarko, Occidental has entered into a binding agreement to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to France's Total for $8.8Bln.

Anadarko, whose headquarters are near Houston, is being targeted because of the Mozambique LNG holdings and its strength in US shale production, especially in the Delaware Basin of Texas and New Mexico. Its other main US assets are in Colorado and the Gulf of Mexico.

Anadarko had said it was positioned to take a final investment decision on Mozambique LNG in the first half of this year.

The Anadarko-led Mozambique venture will be the African nation’s first onshore development, initially consisting of two liquefaction Trains with nameplate capacity of 12.9 million tonnes per annum.

Feed-gas would come from the Golfinho-Atum gas fields located within Anadarko’s offshore Area 1 licence of the Rovuma Basin. 

Analysts noted that Chevron is a substantial LNG player and operates two world-class plants in Western Australia and would fit with Anadarko’s development plans for Mozambique.

Occidental, a major North American chemicals manufacturer, has no LNG assets and is centred on US oil and gas as well as midstream, marketing and refining.

France’s Total is now hoping that the Occidental takeover bid for Anadarko is successful because of its deal with Occidental for Anadarko's Mozambique LNG stake and other African holdings.

“If completed, the acquisition offers us the opportunity to acquire a world-class portfolio of assets in Africa, further enhancing our position as the leading IOC on the continent,” said Total Chief Executive Patrick Pouyanne.

“We would be able to leverage our expertise in LNG by operating a major project in Mozambique and in Deepwater in Ghana and we would become operator of major Algerian oil assets where we are already a partner,” he explained.

Anadarko Petroleum Corp., the US energy company in the midst of a takeover duel between Chevron Corp. and Occidental Petroleum, reported a net loss in its first-quarter earnings, though this was offset by advances made in its Mozambique LNG export project.

The company, whose headquarters are near Houston, reported a net loss of $15 million with one-off charges of $274M amid total cash flow of $1.12 billion, lower than the 1.43Bln posted in the same quarter of 2018.

Anadarko's first-quarter 2019 sales of oil, natural gas and natural gas liquids totaled 64 million barrels of oil equivalent, or an average of 715,000 barrels per day and which included 412,000 barrels of oil.

Anadarko is the subject of the takeover bids because of its strength in US shale production, especially in the Delaware Basin of Texas and New Mexico. Its other main US assets are in Colorado and the Gulf of Mexico.

It also owns valuable assets in deep water oil and LNG, including Anadarko’s planned onshore development in Mozambique which is advancing, according to its latest earnings statement.

“The company continued to make significant progress with its Mozambique LNG project, announcing Sale and Purchase Agreements (SPAs) now totaling more than 9.5 million tonnes per annum (MTPA), with two additional SPAs in the final stages of execution that, if executed, would bring the total volume to more than 11 MTPA,” said Anadarko.

“During the quarter, the project also was designated as the first mover by the Government of Mozambique for the marine facilities to support the onshore LNG industry in Mozambique,” it added.

“The company remains positioned to take a final investment decision during the first half of this year,” stated Anadarko.

In the past week, Anadarko received a take-over offer of $38 billion from Occidental after accepting a $33Bln offer in mid-April from Chevron.

The competition to acquire Anadarko may force Chevron to consider whether it should make a higher offer.

Anadarko said its stockholders were advised to take no action at this time.

Analysts noted that Chevron is a substantial LNG player and operates two world-class plants in Western Australia and would fit with Anadarko’s development plans for Mozambique.

The $33Bln bid from Chevron and the $38Bln offer from Occidental would be valued at an additional $17Bln because of the scale of Anadarko’s debt commitments.

Anadarko had said on April 12 it had accepted Chevron’s bid after rejecting an initial approach from Occidental that fell short of a full bid.

Occidental, a major North American chemicals manufacturer, has no LNG assets and is centred on US oil and gas as well as midstream, marketing and refining.

The Anadarko-led Mozambique venture will be the African nation’s first onshore development, initially consisting of two liquefaction Trains.

The feed-gas will come from the Golfinho-Atum gas fields located within Anadarko’s offshore Area 1 licence of the Rovuma Basin.

The Mozambique plant is being built near the port of Pemba in the northeast Cabo Delgado Province, about 900 kilometres north of Beira.

The Anadarko venture already has supply deals with European utilities Centrica of the UK and French utility EDF, the Japanese utilities Tokyo Gas and Tohoku Electric and energy companies, Royal Dutch Shell, China National Offshore Oil Corp. and Bharat Petroleum of India.

Chevron Corp., the second-largest US oil and gas company and a leading participant in the LNG market with two plants in Western Australia, has agreed a $50 billion deal to buy US energy company Anadarko Petroleum, one of America’s leading independent producers and a key stakeholder in Mozambique LNG assets.