U.S. oil and gas explorer Anadarko Petroleum Corp (APC.N) and Indian billionaire Venugopal Dhoot have launched the auction of a 20 percent stake in a Mozambique gas field that could fetch $4.5 billion, sources familiar with the matter told Reuters.
The Rovuma offshore field is drawing major interest after recent discoveries boosted Mozambique's gas reserves to around 150 trillion cubic feet, enough to supply world number one importer Japan for 35 years. The east African country is expected to compete with Australia and Qatar as a major provider of liquefied natural gas (LNG) to Asia in the future.
PetroChina, India's Oil & Natural Gas Corp and Exxon Mobil Corp are among suitors expected to submit indicative proposals, sources with direct knowledge of the matter told Reuters. Royal Dutch Shell PLC (RDSa.L), which last year missed out on a stake in the same field when it lost a takeover battle for Cove Energy Plc, is also interested, they added.
Shell, ONGC and Exxon declined to comment. PetroChina officials were not available for comment.
Dhoot, who controls consumer electronics to mobile-phone services conglomerate Videocon Group, is leading the process and has hired two investment banks to handle the sale, the sources added.
First round bids are due on March 14 after an information memorandum on the sale was sent to potential bidders in early February, one of the sources said.
Last year, Thailand state oil company PTT Energy trumped Shell to take control of Cove and its 8.5 percent stake in the Rovuma 1 field for $1.9 billion. On a similar valuation, the 20 percent stake on offer could fetch about $4.5 billion, sources said.
Anadarko is the operator of Mozambique's offshore Area 1 with a 36.5 percent interest, while Japan's Mitsui & Co Ltd (8031.T) is the second-biggest holder in the block with a 20 percent stake.
State-owned refiner Bharat Petroleum Corp Ltd (BPCL.NS) and a unit of Dhoot's Videocon Industries (VEDI.NS) own 10 percent each, while PTT has an 8.5 percent interest and Mozambique's state-owned ENH 15 percent.
Shares in Videocon Industries, which has a market value of $1.2 billion, rose as much as 4.6 percent on Tuesday, outpacing a 0.6 percent gain for the Mumbai market index .NSEI.
HIGH PRICE TAG
Videocon is seeking about $2.5-$3 billion for its 10 percent stake, though sources warned buyers are unlikely to pay a huge premium over what PTT paid.
"PTT paid what was a good price, but to get to a $3 billion price tag is difficult," a person familiar with the process said.
A spokesman for Anadarko did not immediately respond to a request for comment on Monday, while Dhoot declined to comment.
Dhoot, who ranks 38th in Forbes' India rich list with a net worth of $1.5 billion, paid $75 million for the Rovuma 1 stake in 2008.
The Indian company is expected to use some of sale proceeds to pare debt of more than $5.5 billion
Anadarko CEO Al Walker last month told an earnings conference call that the company was looking to sell a 10 percent interest in the block, taking the firm's stake to 26.5 percent.
Together with ENI SpA which owns an adjacent field and is cooperating on building gas liquefaction facilities, Anadarko hopes to ship out first LNG in 2018.
Mozambique has a competitive advantage over America and European countries in supplying LNG to gas-hungry Asian markets due to its proximity, one reason why global energy majors are expected to take active interest in the sale, sources say.