Chevron’s Mozambique move, via Anadarko

16 April 2019, Week 15, Issue 783

Chevron has set out a bid to acquire Anadarko Petroleum for US$33 billion, in a cash-and-shares deal. The move has a strong foundation in the US’ newest breed of onshore interests but there are some appealing prospects in Africa as well. The agreement is expected to close in the second half of this year.

In particular, the major noted the appeal of the Mozambique LNG development, which is expected to reach FID this year. The agreement is likely to support the case for the multi-billion dollar development, with Chevron better placed to support such a liquefaction move.

“This transaction builds strength on strength for Chevron,” said the company’s chairman and CEO, Michael Wirth. “The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio … will grow our LNG business.”

The Chevron statement went on to describe the Mozambique plan as “very cost-competitive and [a] well-prepared greenfield project close to major markets”. Sale and purchase agreements (SPAs) have been signed on more than 9.5 million tpy of LNG.

Chevron is already a participant in Angola LNG, which is based on the use of associated gas from the country’s offshore. This has faced some difficulties, including a near-ruinous accident in April 2014. The buyer also has a stake in Australia’s Wheatstone LNG, which should help provide some insight into how such projects can overrun cost estimates.

Mozambique LNG will have two trains, with a total capacity of 12.88 million tpy. Given the volume of SPAs signed, the only remaining requirement should be financing, with a note from Stifel analysts describing this as a “formality”. The analysts went on to say the “Chevron acquisition should expedite the development of both phase one and beyond”.

Beyond Mozambique, Anadarko has production in both Ghana and Algeria. The independent reported sales of 66,000 boepd and 36,000 boepd respectively in the fourth quarter of 2018.

Stifel went on to predict Chevron might sell off these assets. A private equity buyer might be interested in Ghana – setting something of a price for Anadarko’s partner in the country, Tullow Oil, although this company is unlikely to be a buyer itself, owing to its debt pile. Total, Eni or Repsol might be buyers in Algeria, it said.

Anadarko’s spending in Africa has been low, with US$37 million in Algeria over 2018, and US$100 million in Ghana. The company’s full year spending, across all operations, was US$4.8 billion.

Edited by

Ed Reed


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