State-owned natural gas processing and distribution company GAIL
India Ltd. is in talks with Ophir Energy PLC for a stake in its offshore
gas assets in Tanzania, two people with direct knowledge of the matter
said Tuesday, as India steps up its efforts to secure energy supplies to
meet surging domestic demand.
If successful, it would mark the first major transaction in
Tanzania’s offshore natural gas sector, where energy companies have made
significant discoveries in recent years, underscoring the quality of
the assets and setting a benchmark for future deals, analysts said. For
Ophir, a transaction would remove concerns over the Africa-focused oil
and gas explorer’s long-term funding for its ambitious drilling program.
“If a deal was done in Tanzania, it would set a benchmark for the
industry and would reinforce the strength of the geological play and how
important the discoveries there are,” said Investec analyst Brian
Gallagher.
Last week, London-based Ophir confirmed it was looking to sell down a
part of its interests in Blocks 1, 3 and 4 in the East African country.
A spokeswoman for the company declined to comment on whether Ophir was
in talks with GAIL over the blocks. BG Group PLC holds a 60% stake in
the blocks, which it operates.
Investec has valued Ophir’s stake in the existing discoveries in the three blocks in Tanzania at $1.55 billion.
East Africa has become one of the industry’s hottest new regions
following massive gas discoveries in deep waters off the coast of
Mozambique, which neighbors Tanzania. The region, which is ideally
placed to serve Asian export markets, is particularly attractive to
state-owned energy companies from emerging economies that have been
seeking to shore up their long-term energy requirements.
India, which meets around three quarters of its energy needs through
imports, has been pushing to build up a diversified portfolio of foreign
assets to minimize its dependence on the Middle East.
Indian companies have recently signed two multibillion-dollar deals
to buy into offshore natural-gas assets in Mozambique, the focus of the
majority of deals in East Africa.
Other companies such as Thailand’s PTT Exploration and Production PLC
and China National Petroleum Corp. have also spent billions of dollars
buying into discoveries by Anadarko Petroleum Corp. and Eni SpA in
Mozambique.
Between 13 trillion cubic feet and 15 trillion cubic feet of gas had
been discovered so far in the three blocks in Tanzania, where Ophir has a
stake.
–P.R. Venkat in Singapore contributed to this article.
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