LNG

Anadarko Petroleum, the US company that has just agreed to be taken over by Occidental Petroleum and whose liquefied natural gas and African assets will be sold to French major Total in a side deal, has made additional LNG volume sales to Japan and Taiwan for the Mozambique LNG project.

Anadarko said the Mozambique LNG Company Ltd., the jointly owned sales entity of the Mozambique Area co-venturers, has signed a joint sale and purchase agreement with JERA Co. Inc, Japan’s biggest LNG buyer, and CPC Corp. of Taiwan.

The deal is for the sale of 1.6 million tonnes per annum for a base term of 17 years from the commercial start date and on a delivered ex-ship basis whereby the sellers, Anadarko’s successors and its partners, supply the shipping.

“This co-purchasing agreement with JERA and CPC brings together two prominent Asian foundation customers and will ensure a reliable supply of cleaner energy to meet the growing demands of both Japan and Taiwan,” said Mitch Ingram, Anadarko Executive Vice President for the international business.

“We are excited to take the next step with the expected announcement of a final investment decision (FID) for the Mozambique LNG project on June 18, as we remain on track to complete the project financing process and secure final approvals,” added Ingram.

“This new SPA brings our total long-term agreements to 11.1 MTPA, and we are extremely pleased and grateful to JERA and CPC for selecting Mozambique LNG to be part of their long-term energy portfolio,” state the Anadarko executive.

Anadarko has agreed to a takeover by Occidental after a bid valued at $55Bln when Anadarko’s debts are included, was chosen in preference to a rival bid from Chevron Corp.

Occidental has already offset $8.8Bln of its acquisition agreement for Anadarko by agreeing to sell Total its Mozambique LNG stake and its African oil and gas assets.

Anadarko is operator of the Mozambique project and has a 26.5 percent stake and operatorship of the Area 1 Rovuma Basin reserves that underpin the LNG venture.

Other shareholders in the Area 1 licence and LNG project include the Japanese trading house Mitsui and 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.

The onshore Mozambique project will have phase one output of almost 12.9 MTPA.

Anadarko and its partners have signed up previous sales agreements for 9.5 MTPA of cargoes from the Mozambique project with Royal Dutch Shell, China National Offshore Oil Corp., Tokyo Gas, the UK’s Centrica, France's EDF and Indonesian energy company Pertamina.

Two other projects are planned in Mozambique from the Area 4 licence resources held by Italian energy company Eni and partners.

These include the Coral floating LNG joint venture with capacity of around 3.4 MTPA already under construction and scheduled to come on stream in 2022.

The Area 4 onshore Mamba LNG project is also expected to be sanctioned in 2019 and production is scheduled to start in 2024.

The Area 4 consortium is formed by Mozambique Rovuma Ventures, comprising Eni 25 percent, ExxonMobil 25 percent and China National Petroleum Corp. (PetroChina) with 20 percent.

The remaining 30 percent of shares in that licence are held in parcels of 10 percent by South Korean utility and energy company Korea Gas Corp., Galp Energia of Portugal and Mozambique’s 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.

Occidental Petroleum, the Texas-based company competing with Chevron Corp. to take over Anadarko Petroleum for around $55 billion including debt, has improved the structure of its offer and said it would sell Anadarko’s Mozambique LNG stake and other African assets to French major Total if its deal was accepted.

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

Occidental is trying to persuade Anadarko shareholders to accept its offer rather than a merger agreement with Chevron, which is structured as a 75 percent stock and 25 percent cash deal.

“The revised offer creates immediate value for Anadarko shareholders and increases the chances of closing a deal,” said Occidental.

“In connection with Occidental’s proposal to acquire Anadarko, it has entered into a binding agreement to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to Total for $8.8Bln,” added the company.

“The sale is contingent upon Occidental entering into and completing its proposal to acquire Anadarko, and would be expected to close simultaneously or as soon as reasonably practicable afterwards,” stated Occidental.

Anadarko also issued a statement after the revised May 5 offer from Occidental when it referred to the still valid merger agreement with Chevron.

“In accordance with the terms of the Chevron Merger Agreement, and in consultation with its financial and legal advisors, Anadarko's board of directors will carefully review Occidental's Revised Proposal to determine the course of action that it believes is in the best interest of the company's stockholders,” said Anadarko.

Anadarko first announced on April 11 that it had received a takeover bid of $33Bln from Chevron, amounting to $50Bln if debt is included, and the signing of a formal merger agreement.

Anadarko, whose headquarters are near Houston, is being target 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 gas and LNG, including the onshore development in Mozambique.

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. 

The Mozambique liquefaction plant is being built near the port of Pemba in the northeast Cabo Delgado Province.

Analysts said the revised terms and LNG accord with Total could now force Chevron to consider making an improved offer.

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.

“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.

“We would also be able to generate value through adding volumes to our growing LNG portfolio where we are already the second-largest private player,” added the CEO.

In South Africa, the exploration licences from Anadarko are close to Total’s recent Brulpadda discovery.