Shell Exploration & Production (Shell Bidco) has made an offer of £992.4 million for East Africa-focused Cove Energy.
UK-based Cove's primary asset is its 8.5 per cent stake in the Rovuma Offshore Area 1 in Mozambique, where operator Anadarko has found over 30 trillion cubic feet of natural gas. The Rovuma offshore basin is a frontier exploration area, holding large resources of natural gas reserves suitable for LNG projects.
Cove decided in January this year to put itself up for sale. It has said it will now recommend its shareholders accept Shell’s offer.
Shell said the offer fits with its strategic aim to drive forward its investment programme, deliver sustainable growth and provide competitive returns to shareholders.
East Africa is a major prospective hydrocarbon province which has seen a significant increase in exploration activity in recent years. Shell already has interests in Tanzania, and said that the acquisition of Cove would mark its entry into exciting new hydrocarbon provinces in Kenya and Mozambique, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa.
As one of the world's largest LNG producers, adding Cove's assets to its portfolio would strengthen and further diversify Shell's existing global LNG portfolio of production and development projects. It currently has one of the most diverse LNG portfolios and access to strategic global markets with equity sales volumes of 18.83 mtpa of LNG in 2011.
In joint ventures with partners, Shell currently produces LNG in Australia, Brunei, Malaysia, Nigeria, Oman, Russia and Qatar. The company has access to the key LNG markets of Europe, Asia Pacific and North America. In 2011, Shell joint ventures supplied more than 30 per cent of global LNG volumes.
