Chevron gets opportunities, risks with acquisition of Anadarko’s Mozambique gas assets

Chevron Corp.’s acquisition of Anadarko Petroleum Corp. gives it access to one of the biggest natural-gas discoveries in Africa in the past decade. It also exposes the company to security risks as Islamist insurgents step up attacks in northern Mozambique, where the deposits are located.

The liquefied natural gas project that Anadarko’s been developing since discovering gas in the Rovuma Basin in 2010 will generate $130 billion of revenue over its lifespan, according to the Mozambican Finance Ministry. Of that, the project’s owners will receive $38 billion after taxes and costs, the ministry estimated in June.

That windfall comes with a downside, though. Anadarko has already been caught up in the conflict in northern Mozambique. In February, suspected militants opened fire on a company convoy, beheaded one of its contractors and injured six people.

“Through the acquisition, Chevron takes on the above-ground risk exposure of Anadarko’s portfolio,” Nick Branson, an analyst at Bath, England-based research firm Verisk Maplecroft, said in an emailed response to questions. “The Mozambique assets will increase its overall corporate risk exposure.”

Attacks by the insurgents have increased in recent months, according to data compiled by the U.K.-based Armed Conflict Location & Event Data Project. They may escalate further as the country approaches general elections in October, Branson said.

Anadarko “has done a nice job of advancing the project,” Chevron spokesman Kent Robertson said in a text message. “The team they have assembled is very capable and we expect the project to proceed.”

Anadarko didn’t respond to requests for comment.

Still, Chevron has experience dealing with conflict on the continent. It’s one of the largest producers in Nigeria, the continent’s biggest source of oil, where militants have carried out sabotage, kidnappings and crude theft for decades.

The $20 billion Anadarko project will be the biggest investment in Africa’s history, according to Standard Bank Group, the South African lender. Exxon Mobil Corp.’s onshore LNG processing facility located nearby will probably start producing soon after Anadarko’s and is even bigger.

“The announcement can only be positive for Mozambique,’’ said Paul Eardley-Taylor, Standard Bank head of oil and gas for Southern Africa. “It brings in a well-capitalised international oil company that has highly relevant, recent experience’’ with major LNG builds, he said.


Source: Bloomberg



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