Shell in talks with Eni, Anadarko over Mozambique

Royal Dutch Shell , Europe’s largest oil company, is in talks with Anadarko Petroleum Corp. and Eni SpA about joining gas projects off Mozambique.

Shell is also holding discussions with smaller shareholders in the Rovuma basin, where the largest gas discoveries of the past decade have been made, said Maarten Wetselaar, executive vice president of Shell Upstream International.

“We’re talking to various shareholders about the future of the project,” Wetselaar said Tuesday in an interview at the Oil & Money conference in London. “For the moment, these are really just commercial discussions.”

Anadarko jumped as much as 2.3 percent in New York trading and was up 1.1 percent at $71.50 by 2:28 a.m. local time. John Christiansen, an Anadarko spokesman, declined to comment.

Eni and Anadarko are the operators of fields off Mozambique that may hold more than 100 trillion cubic feet (2.8 trillion cubic meters) of natural gas. Shell was outbid this year for Cove Energy Plc, owner of an 8.5 percent stake in Rovuma Area 1, by Thailand’s PTT Exploration & Production Pcl.

“Everybody’s trying to establish what the price range is,” Wetselaar said. “A lot of people will leave because it’s not their business. It’s too big, too complex, too technologically risky.”

Shell may also join in exploration projects off Mozambique, he said. “We’ll look at exploration in east Africa, and we’ve got a few blocks in Tanzania, and we’re looking at Mozambique.”

Mozambique expects to start operating a liquefied natural gas terminal in 2018. The plant will have two production units, known as trains, requiring investment of as much as $20 billion, Deputy Minister of Mineral Resources Abdul Razak Noormahomed said last month.

The facility may need as many as 10 trains and another plant may be required, Frank Patterson, senior vice president of international exploration at Anadarko, said on Nov. 1. Shell is the biggest LNG supplier in the world.

“At the moment there is not really any company involved” in Mozambique “that has LNG credentials,” Wetselaar said.

Global oil companies are expanding in LNG, which is gas cooled to a liquid for transportation by tanker, as Asian demand drives prices higher. The race to tap Mozambique’s fields, estimated to hold enough gas to meet Asia’s needs for at least five years, sparked a bidding war this year between Shell and PTTEP. The Thai company agreed to buy Cove for about $1.9 billion.

Mozambique may become the world’s third-largest LNG producer, behind Australia and Qatar, in as little as 10 years, Anadarko’s Vice President of International Operations Don MacLiver said Oct. 10. Its gas industry could attract as much as $30 billion in investment from 2013 to 2018, according to the local unit of Standard Bank Group Ltd.