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Eni Hits It Big Off Mozambique
Eni (NYSE:E) reported a large natural gas discovery offshore Mozambique, adding to a list of recent exploration successes by the industry here.
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Rovuma Basin
Eni's discovery occurred at the Mamba South One prospect located in Area 4 Offshore in the Rovuma Basin. The company reported finding nearly 700 feet of continuous natural gas pay in various Oligocene sands.
Eni estimated that the Mamba South Area has a minimum of 15 trillion cubic feet (Tcf) of gas in place. The company also called it "the largest operated discovery in the company's exploration history." After Mamba South One is complete, Eni plans to drill the Mamba North One, another exploration prospect in Area 4 offshore.
Eni is the operator and 70% owner of Area 4 Offshore, which was awarded in 2006. The company's partners here are Galp Energia, a Portuguese energy company, the Korea Gas Corporation and Empresa Nacional de Hidrocarbonetos de Mocambique, the Mozambican state-owned oil and gas company.
Other Players
Eni is not the only operator that has found exploration success in offshore Mozambique. Anadarko Petroleum (NYSE:APC) is the operator and 36.5% owner of Offshore Area 1, also in the Rovuma Basin.
Anadarko Petroleum has reported five successful discoveries in Offshore Area 1, with the latest at the Camarao prospect. The company estimates that it has 10 Tcf of recoverable resources in this area.
Anadarko Petroleum also feels confident that this estimate is at the low end and will move higher as the company's exploration program moves forward. Anadarko Petroleum is moving a second drillship to the basin, and plans as many as seven exploration, or appraisal, wells over the next 12 months.
Statoil (NYSE:STO) is also active in Mozambique and is the operator of Offshore Area 2, and a neighboring offshore concession in Tanzania. In 2010, Statoil farmed out a 35% interest in the Tanzanian concession to Exxon Mobil (NYSE:XOM).
Infrastructure Needs
It will be years before any of these resources can be brought to market, as offshore Mozambique is a frontier area, and lacks the necessary infrastructure to process or transport such large quantities of natural gas. There is also not enough local demand in the East Africa area that much of this natural gas will be exported to international markets. This export business model requires the construction of a liquefied natural gas (LNG) facility.
Anadarko Petroleum is planning on a two train LNG plant with capacity of ten million tons annually. The company is expecting first production from Mozambique in 2018.
The Bottom Line
The recent discoveries of natural gas by Eni and others, in Mozambique, demonstrates that the energy industry has to go farther into frontier areas to find oil and gas resources to meet future demand. We should all worry about the global consequences when these frontier areas are all exhausted. (For additional reading, see A Guide To Investing In Oil Markets.)
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Rovuma Basin
Eni's discovery occurred at the Mamba South One prospect located in Area 4 Offshore in the Rovuma Basin. The company reported finding nearly 700 feet of continuous natural gas pay in various Oligocene sands.
Eni estimated that the Mamba South Area has a minimum of 15 trillion cubic feet (Tcf) of gas in place. The company also called it "the largest operated discovery in the company's exploration history." After Mamba South One is complete, Eni plans to drill the Mamba North One, another exploration prospect in Area 4 offshore.
Eni is the operator and 70% owner of Area 4 Offshore, which was awarded in 2006. The company's partners here are Galp Energia, a Portuguese energy company, the Korea Gas Corporation and Empresa Nacional de Hidrocarbonetos de Mocambique, the Mozambican state-owned oil and gas company.
Other Players
Eni is not the only operator that has found exploration success in offshore Mozambique. Anadarko Petroleum (NYSE:APC) is the operator and 36.5% owner of Offshore Area 1, also in the Rovuma Basin.
Anadarko Petroleum has reported five successful discoveries in Offshore Area 1, with the latest at the Camarao prospect. The company estimates that it has 10 Tcf of recoverable resources in this area.
Statoil (NYSE:STO) is also active in Mozambique and is the operator of Offshore Area 2, and a neighboring offshore concession in Tanzania. In 2010, Statoil farmed out a 35% interest in the Tanzanian concession to Exxon Mobil (NYSE:XOM).
Infrastructure Needs
It will be years before any of these resources can be brought to market, as offshore Mozambique is a frontier area, and lacks the necessary infrastructure to process or transport such large quantities of natural gas. There is also not enough local demand in the East Africa area that much of this natural gas will be exported to international markets. This export business model requires the construction of a liquefied natural gas (LNG) facility.
Anadarko Petroleum is planning on a two train LNG plant with capacity of ten million tons annually. The company is expecting first production from Mozambique in 2018.
The Bottom Line
The recent discoveries of natural gas by Eni and others, in Mozambique, demonstrates that the energy industry has to go farther into frontier areas to find oil and gas resources to meet future demand. We should all worry about the global consequences when these frontier areas are all exhausted. (For additional reading, see A Guide To Investing In Oil Markets.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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