Mozambique Natural+Gas

= China National Petroleum Corporation (CNPC) Invest USD 4.21 billion to gain 20 Percent Share in Area 4 of Rovuma Basin off coast of Mozambique =

Executive Summary:
It is highly likely that Chinese investments in natural gas have, and will continue to occur over the next 5 years in Mozambique. Mozambique is one of two countries (Tanzania) in East Africa that produces natural gas. Anadarko (US based) and Eni (Italy) have been the biggest competition in the area, but recently CNPC invested USD 4.21 billion to gain access to the Mozambique off shore gas fields. This deal between ENI East Africa and the CNPC, gave the CNPC 28.57 percent of Eni's share who owns 70 percent of area 4 of the Rovuma Basin off the coast of Mozambique. This equates to the CPNC owning 20 percent of Area 4.

Discussion:
The CPNC recently purchased a 28.57 percent stake in the Rovuma Basin off the coast of Mozambique. Mozambique currently holds 4.5 trillion cubic feet (Tcf) of natural gas reserves[|.]With this new discovery it is considered one of the biggest discoveries of natural gas in the past decade. Until the purchase by the CNPC, the American lead Anadarko and Eni (Italy) have been the biggest investors in the region. The discovery of new liquified natural gas (LNG) areas are large enough to bring new investors, such as China, into the area. Also, there are onshore natural gas fields, which produce 135 billion cubic feet per year (Pande and Temane) and are controlled by Sasol, a South African country[|.] Majority of the natural gas produced in Mozambique is exported via the 535 mile Sasol Petroleum International Gas Pipeline. This pipelines is owned by Sasol, the South African Government, and Mozambique's Government. The Rovuma Basin is divided up into 6 sections. The CNPC has identified up to 75 Tcf in area 4 alone. Due to Mozambique's location, it is expected that it will be a major impact in Asian LNG markets in the next few years[|.]

Analytic Confidence:
Analytic confidence for this assessment is high. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise, worked alone, and did not use structured analytic methods. The subject is moderately complex and the deadline was easy to meet.

Analyst:
Sean Dailey sdaile35@lakers.mercyhurst.edu