New find raises stake in bid war for Cove Energy

US firm Anadarko Petroleum Corp announced a further major gas find off the coast of Mozambique on Monday, raising the stakes in the bid war for London-listed partner, Cove Energy.

The takeover battle for Cove could now have further to run, analysts say, with Royal Dutch Shell returning to the fray after Cove last month agreed to a $1.9 billion offer from Thailand’s state oil firm PTT Exploration and Production. Huge gas fields discovered off the coast of Mozambique and Tanzania have thrust East Africa into the limelight as a future new energy supplier to Asia, attracting the interest of major oil firms anxious not to miss out on a slice of the action.

Anadarko said on Monday that it could expand its current development plan for Mozambique after its discovery of a second major gas field in the Offshore Area 1 block. Following the latest discovery it now reckons the block could hold between 30 and 60 tcf of recoverable gas. Around 10 trillion cubic feet of gas would be enough to meet an entire year’s gas consumption by Europe's four biggest economies combined — Germany, France, Britain and Italy.

Thailand's PTT Exploration and Production and Shell want to buy Cove because it has an 8.5 percent stake in the Mozambique block where Anadarko as licence operator plans to build large plants to ship the gas abroad as liquefied natural gas (LNG).

Bernstein analyst Oswald Clint said he continues to expect Shell, which said it was considering its options after PTT trumped its offer for Cove in May, to return with a higher offer.

"Extra gas in the ground might tempt them to act sooner rather than later," he said.

Canaccord Genuity analyst Braden Purkis also noted that the new gas field, the Atum-Golfinho complex, is located entirely in Anadarko and Cove's block, rather than extending into a neighbouring exploration area, like the first field.

"It makes Shell's decision a bit easier," he said.

In addition to Anadarko's discoveries, Italy's ENI has also made huge finds offshore Mozambique, while others including Britain's BG Group and Exxon Mobil have made significant finds to the north in Tanzania.

Anadarko said Atum-Golfinho, which is situated north of its Prosperidade field, could contain between 10 and 30-plus tcf of gas, raising volumes from the 20 tcf estimate it gave in May after Monday's second successful exploration well on the field.

Japan's Mitsui and Indian groups Bharat Petroleum and Videocon are also partnered with Anadarko in the block.