VENTURES AFRICA – Italian energy group, Eni says it has completed the sale of a 28.57 percent stake in its East African unit to China National Petroleum Corporation (CNPC).
Eni East Africa currently previously controlled a 70 percent stake in the Area 4 block of the Rovuma basin, in northern Mozambique, next to the Tanzanian border.
The 20 percent sale to CNPC is at a cost of $4.21 billion. While the Chinese group now has an indirect 20 percent stake in the oil block, the Italian company will remain as lead operator with a 50 percent share.
The remaining partners in the Area 4 block are Mozambican state company, Empresa Nacional de Hidrocarbonetos (ENH) , South Korea’s Kogas and Portugal’s Galp Energia with 10 percent stakes each.
Eni’s statement was silent on information about the capital gains tax payable to Mozambique, which can go to a maximum of 32 percent.
In February this year, the Eni group announced it had found over 4 trillion cubic feet of gas in the block and talks have been underway for several months over the sale to CNPC.
This deal is yet another testimony of China’s desire to seek more natural resources for its growing population.
China became the third-largest investor in mergers and acquisitions in Africa, favouring the oil and gas sector, according to a report by international law firm Freshfields Bruckhaus Deringer that came out this month showed.
Chinese dealmakers favor the natural resources sector with $8.1 billion invested in oil and gas across three deals and $6.7 billion invested across 19 deals in metals and mining over the last 10 years, and their preference for these sectors will likely continue, said the report.
Large reserves of gas have been discovered in Mozambique over the last few years. The upsurge in investment in this sector has seen Angola become one of the best growing economies on the African continent.