Petroleum Africa
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Tuesday, May 28, 2013
After practically salivating for more than a year over picking up a stake in Mozambique’s offshore gas boom, Shell has decided it is no longer interested. The company had been in talks with Offshore Area 1 operator Anadarko Petroleum, but decided it will focus on other projects and pulled out of talks.
A very interesting move for Shell as it has been wanting to acquire a stake in the East Africa gas boom for some time. The company was at one time a contender for Cove Energy who held a stake in Offshore Area 1; however, it lost out to PTTEP in a bidding war.
According to reports Shell will concentrate its efforts on projects off the coasts of Benin, Gabon, and South Africa. While the risk is seen as greater, Benin and Gabon tend to provide more oil than gas which would be more lucrative for the company if it did happen to hit offshore either of these countries.
Shell’s decision has left some confused if the investor boards are anything to go by, with one blogger saying that the company either needs to make a big acquisition or it risks being acquired itself; “And if not Mozambique – where?”. Another blogger pushed for a Shell acquisition of Anadarko; sure it would be costly but it would put Shell in a prime position in East Africa, add to its South African holdings, and give it a nice portfolio of nearly frontier acreage in West Africa, not to mention production in North Africa out of Algeria.
There was also talk on the boards indicating that Shell should leave these countries all together, highlighting Nigeria as a prime example of the problems the company faces on the continent. Sure the company bailed on its onshore assets in the West African country, but it still holds deepwater blocks. Unfortunately getting anything done on those blocks proves to be time intensive with approvals taking too long to have any meaningful impact on a company’s financials.
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