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Exxon Mobil Corp. is considering buying stakes in natural gas discoveries off Mozambique made by Anadarko Petroleum and Eni potentially giving a tax windfall to the African nation grappling with a deepening debt crisis, according to two people with knowledge of the matter.
Acquiring a share of Anadarko's Area 1 in the Rovuma Basin off Mozambique's north coast could generate capital gains tax of about $1.3 billion for the government, one of the people said, asking not to be identified because the matter isn't public. Exxon, the world's largest oil and gas company, is also interested in Eni's Area 4, the people said. Three years ago, China National Petroleum Corp. purchased 20 percent of Area 4 for $4.2 billion.
Should Exxon decide to invest in the fields, it would potentially accelerate development in what could be one of the world's largest liquefied natural gas projects. The tax revenue generated by the transaction could also ease the southern African country's looming credit crunch. Mozambique is struggling to balance its books after $1.4 billion of hidden debt was disclosed in April, prompting the World Bank and other donors to suspend aid.
"It would make a lot of sense to bring Exxon into the project," Anish Kapadia, a London-based analyst at Tudor Pickering Holt & Co., said by email. The company is "a world class LNG operator that has experience in developing similar scale LNG in Qatar."
"We don't comment on rumors or speculation," Lauren Kerr, a spokeswoman for Exxon, said by email. Anadarko and Eni declined to comment.
Anadarko shares climbed 4.4 percent as of 12:31 p.m. in New York, while Exxon advanced 1.8 percent. Eni rose 4.7 percent, in line with the gain in the 20-member STOXX Europe 600 Oil & Gas Index.
Eni CEO Claudio Descalzi said last month that the company is in talks on selling a stake in its Mozambique discovery and expects to reach a final investment decision on an LNG project this year.
Exxon is already focused on Mozambique after winning three exploration licenses in October for offshore blocks to the south of the Anadarko and Eni discoveries. The company also has a working interest in Statoil's Block 2 in Tanzania, north of the Rovuma Basin.
Mozambique's Minister of Natural Resources and Energy Pedro Couto declined to comment on whether Exxon was interested in taking a stake in the Anadarko and Eni discoveries.
"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," said Martin Kelly, director for sub-Saharan Africa research at Wood Mackenzie. "But any deal will have to be at the right price for the right equity to go ahead."
While the vast gas discoveries have the potential to more than triple Mozambique's economic growth by 2021, in the short term the nation's debt is at a high risk of distress, according to the International Monetary Fund. Government bond yields jumped to a record 18.94 percent last week and the IMF wants an international and independent audit of state-owned entities whose debt Mozambique failed to disclose to investors when arranging to convert another corporate loan into sovereign credit.
Anadarko and Eni in December agreed on a plan to develop adjoining areas in the Rovuma basin, targeting a combined 24 trillion cubic feet of gas. Anadarko has yet to make a final investment decision on its $15 billion LNG project in Mozambique.
The company appointed John Bretz as interim country manager this month after his predecessor retired.