Mozambique Close to Gas Deal With Eni

Mozambique Close to Gas Deal With EniMozambique Close to Gas Deal With Eni

Mozambique's long-delayed offshore gas project with Italy's Eni could be approved within months, sources close to the deal said, sparking investments with the potential to transform one of the world's poorest countries into a major energy player.

Mozambique made one of the world's biggest natural gas finds in a decade in 2010 but negotiations with operators Eni and US firm Anadarko have dragged on for years due to disputes over terms and concerns about falling energy prices, Reuters reported.

But Eni has in recent weeks struck deals with contractors and Mozambique's government which could help it to make a final investment decision on Oct. 31, industry sources said.

The company's Mozambique concession is split between two huge gas fields, called Coral and Mamba. Eni has previously said it expects to make a final investment decision on Coral this year and Mamba in 2017.  

Reserves in Mozambique's Rovuma Basin amount to some 2.4 trillion cubic meters—enough to supply Germany, Britain, France and Italy for nearly two decades. It is likely to take at least five years before gas production begins.

Samsung Heavy also said last week it was in exclusive talks with Eni to provide a floating liquefied natural gas platform as part of a consortium with Technip and Japan's JGC, in a contract worth around $5.4 billion.

General Electric has also been approved as a contractor, two sources said. Negotiations with government over tax terms and the funding of the Mozambique national gas company have also moved forward in the last two months, the sources said.

"There has been significant progress in the last few weeks. It's making investors a lot more optimistic that a final decision isn't too far away," one banker involved in the deal told Reuters.

The last major sticking point is how Eni will finance the $11 billion development, the sources said.

Eni is expected to raise several billion dollars by splitting its concession in two and selling up to 20% of its Mamba gas field, and the operating rights, to Exxon Mobil, sources involved said.