Exxon Considers Acquiring Stake in Mozambique NatGas Project

Exxon Mobil Corporation (NYSE: XOM) is considering to purchase a stake in a huge natural gas development project of Anadarko Petroleum Corporation (NYSE: APC) and Eni SpA (NYSE:E) in Mozambique, according to Bloomberg.

Bloomberg reported that the natural gas deal would produce great benefits for the African country, which is struggling with poverty. Mozambique has been stricken by a massive debt crisis, coupled with huge taxes over the last several years. The African nation had a hidden debt amounting to $1.4 billion, revealed in the month of April this 2016, which has led to the end of financial support from the World Bank as well as other donors.

A single stake of Anadarko Petroleum Corporation’s Area 1 located in the Rovuma Basin off Mozambique’s north coast could produce capital gains tax of up to $1.3 billion. Based on a reliable source, Exxon Mobil has displayed interest in  acquiring Area 4, owned by Eni SpA. It is also in the mentioned region where China National Petroleum Corp. purchased a 20 percent stake for approximately $4.2 billion a few years back.

While the oil and gas corporation declined to give a statement regarding the development, as part of its policy, Anadarko and Eni did not also comment on the matter. However, the news regarding this massive deal was not surprising at all as Eni had already implied plans to auction a stake of its gas field in the African country during the previous month. The mentioned project comprises of separate large natural gas discoveries in the Indian Ocean, which several firms are also interested to take advantage of.

Mr. Pedro Couto, the Minister of Natural Resources and Energy of Mozambique, did not give a statement regarding the plans of Exxon to buy a stake owned by Anadarko and Eni. Yet, Exxon Mobil has been in advanced negotiations to procure a 15 percent share of interest in the gas field.

According to Wood Mackenzie sub-Saharan Africa research director Mr. Martin Kelly, “A supermajor coming in to the blocks — with experience developing and operating projects of the scale of Mozambique LNG — has been expected for a while now.”

“But any deal will have to be at the right price for the right equity to go ahead,” the director further stated.

The International Monetary Fund stated that the deal, as well as other hydrocarbon discoveries in the African country would significantly ease Mozambique’s economic woes in the long run. In addition, it will also aid the African nation in eliminating its huge debt crisis.

As of 10:22 AM GMT -4 on June 30, XOM shares are trading at $92.90, up by 0.48 percent or 0.44. At present, Exxon Mobil’s market capitalization posts at 391.79 billion, while its dividend yield stands at 3.23 percent.

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