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Total closes acquisition of 26.5% operating stake in Mozambique LNG

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Total closes acquisition of 26.5% operating stake in Mozambique LNG

Highlights

Final $3.9 bil purchase price for 26.5% stake

Mozambique LNG is 'one of a kind' asset: CEO

First LNG from project scheduled for 2024

London — Total has closed the $3.9-billion acquisition of a 26.5% operating stake in the Mozambique LNG project, the French major said Monday, as it continues the rapid expansion of its LNG business.

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Total agreed in May to buy the African assets of US-based Anadarko Petroleum for $8.8 billion once the latter's takeover by Occidental Petroleum was completed, with the purchase of the Mozambique LNG stake the first part of the deal toconclude.

Closing operations are still ongoing in relation to Anadarko's assets in the other countries -- Algeria, Ghana and South Africa, Total said.

"Mozambique LNG is one of a kind asset that perfectly fits with our strategy and expands our position in LNG," Total CEO Patrick Pouyanne said in a statement.

The project -- expected to come online in 2024 -- includes the development of the Golfinho and Atum fields in Mozambique's Offshore Area 1 and the construction of a two-train liquefaction plant with a capacity of 12.9 million mt a year.

Mozambique LNG projects

Total said Mozambique LNG was "largely derisked" after almost 90% of the production was sold through long-term contracts with key LNG buyers in Asia and in Europe.

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The partners in Offshore Area 1 are Total (26.5%), Japan's Mitsui (20%), Empresa Nacional de Hidrocarbonetos (15%), India's ONGC Videsh (10%), Beas Rovuma Energy Mozambique Limited (10%), India's BPRL Ventures Mozambique (10%) and Thailand's PTTEP (8.5%).

LNG EXPANSION

Total has been building its LNG portfolio quickly in recent years, through participation in big-ticket LNG projects and through acquisitions, notably the $1.5-billion purchase of Engie's portfolio of upstream LNG assets in July last year.

Pouyanne, speaking in July after Total released its second-quarter results, said the global LNG market was moving quickly, and that the best way to handle the volatile market environment was by having a large portfolio.

He said that by 2025 there would be around 50 million mt/year of LNG in its portfolio, expanding on a previous aim ofhaving an LNG portfolio -- including its own production and LNG bought from other parties -- of 40 million mt/year by 2020.

Its own LNG production is increasing rapidly, and is set to reach 20 million mt in 2020.

Pouyanne in July defended the purchase price of the stake in Mozambique LNG, which works out at around $150 million per percentage of working interest.

This, he said, is cheaper than a range of other acquisitions that took place between 2012 and 2014 for stakes in Offshore Area 1, which contains the gas for the project, which were valued at $200 million-$260 million per percentage of working interest.

He also said he would not rule out sharing more infrastructure in Mozambique with a second LNG project being developed in Mozambique by ExxonMobil, Italy's Eni and China's CNPC.

-- Stuart Elliott, Stuart.Elliott@spglobal.com

-- Edited by Jonathan Dart, jonathan.dart@spglobal.com