Total has closed its deal to take over the operating stake in the Mozambique LNG liquefied natural gas development from Anadarko Petroleum, the first part of its $8.8 billion purchase of the now Occidental Petroleum-owned US company's African assets.
The French supermajor has taken over the 26.5% operating stake in the two-train scheme, for which a final investment decision was made in mid-June, with the purchase valued at $3.9 billion.
Total chief executive Patrick Pouyanne had said in the company's strategy update on 24 September that he was travelling to Mozambique later that week, with the deal expected to close late last week or early this week.
Total is closing its acquisition of the ex-Anadarko Africa assets in phases, with the Area 1 asset in Mozambique the first to be followed by the assets in Algeria, then Ghana and then the exploration assets in South Africa.
Pouyanne said the deals for the Algeria and Ghana assets should close before the end of this year or perhaps early next year.
"Mozambique LNG is one of a kind asset that perfectly fits with our strategy and expands our position in liquefied natural gas," Pouyanne said on Monday.
"As the new operator, we are fully committed to the Mozambique LNG project and we will bring the best of our human, technical, marketing and financial capacities to further strengthen its execution.
"Total will of course work on the strong foundations established by the previous operator and its partners, in order to implement the project in the best interest of all those involved, including the government and the people of Mozambique."
The first phase development of Mozambique LNG involves two same-sized trains with combined capacity of 12.88 million tonnes per annum of LNG, with long-term offtake agreements already in place for 90% of that capacity.
Feed gas will come from the deep-water Golfinho-Atum field in Offshore Area 1. Start-up is seen in 2024.
In July, Pouyanne argued that the near-$4 billion price tag for the controlling stake in Mozambique LNG compared favourably with other deals in the East African nation's nascent LNG industry.
“We will pay about $150 million per percentage of working interest for these assets — around $4 billion for 26.5%," he said at the company's second-quarter announcement.
He compared Total’s entry into Anadarko-operated Area 1 with previous stake sale-and-purchase agreements in Mozambique this decade.
Although he said the deal between ExxonMobil and Eni in Area 4 was done at $110 million per percentage of working interest, Pouyanne argued that the Area 1 project has been comparatively de-risked by Anadarko’s recent final investment decision on the first two-train development, whereas plans for Area 4 await sanction.
“On Area 1 — our licence — all transactions which took place between 2012 and 2014 — PTTEP-Cove Energy, ONGC-VideoCon, ONGC-Anadarko — took place at between $200 million and $260 million per percentage of working interest,” Pouyanne continued.
“So, I strongly argue that this transaction was done at attractive conditions.”
Pouyanne highlighted that a report from energy analysis company Wood Mackenzie on the price of it its Mozambique LNG stake “values only the first two trains”.
“Anyone that is using this alone is grossly undervaluing this one-of-a-kind asset,” he said.
Pouyanne also said at the time that Anadarko’s African assets will bring more than 3 billion barrels of resources at less than $3 per barrel.
Production of 100,000 barrels per day will rise to 160,000 bpd by early 2025, with the deal being free cash flow positive from day one — inclusive of Mozambique capital expenditure.