05 Sep 2014 – Total SA [EPA:FP] is actively looking for upstream assets in Tanzania and Kenya, CEO Christophe de Margerie told this news service.
“We are indeed looking to buy assets in Kenya but also in Tanzania,” de Margerie said, in an interview at the Mouvement des entreprises de France (MEDEF) conference in Paris.
Total already has upstream exploration assets in Tanzania and Kenya, none of which are producing.
“Tanzania is interesting for Total. There are huge reserves of offshore gas. Ophir [LON:OPHR] sold its 20% in the BG Group assets last year, the deal was USD 1.25bn for reserves of about 15tcf, I’d expect Total to be looking for a similar volume of gas to this,” said a sector analyst.
One source also pointed to BG Group’s Tanzanian deepwater LNG project as a likely target for Total. The firm has large capex commitments; USD 11bn for 2014 alone. Mergermarket reported in March that BG Group was rumoured to be considering selling a stake in the project to raise funds. Royal Dutch Shell [AMS:RDSA] and Total were tipped as the most likely buyers at the time.
BG Group’s 60% stake in a deepwater LNG project in Tanzania, which it acquired in 2010 after it entered into a partnership with Ophir Energy, is valued at USD 2.5bn by analysts.
The industry source and a sector lawyer named Vanoil’s [TSX:VEL] Kenyan assets and Taipan Resources [TSX:TPN] as likely of interest to Total. Vanoil did not respond to a request for comment.
Taipan Resources’ CEO Max Birley said his firm had not been approached by Total. “If people want to buy us, that’s fine; it would have to be a price that is attractive to the shareholders. We are trying to grow the company and are looking at a number of different ways to do so,” he added.
The sector lawyer, industry source and a sector banker also said that Ophir’s Block 7 in Tanzania is a likely target. Mergermarket reported earlier this week on rumours that Ophir is looking to dispose of the block. Ophir is undergoing a cost-cutting programme and many believe its upstream portfolio is too large for it to manage. Its Block 7 is not being drilled at present.
Total is already in Kenya, where it acquired a 40% stake in five offshore licenses (L5, L7, L11a, L11b and L12) in the Lamu basin in 2011. Following the 3D seismic survey campaign covering 3,500 km² that was conducted during the initial exploration period, 25% of the surface area of the five blocks was relinquished.
In 2013, two exploration wells were drilled in Blocks L7 and L11b, but did not result in positive results, the firm said.
In 2012, the Group also acquired the L22 offshore license (100%, operator), located in the same basin. In December 2013, Total sold 30% of its stake in this license. A 2D seismic survey and sea core drilling operations are in progress on the L22 offshore license.
In Tanzania, Total holds the license to the Lake Tanganyika North area. The lake was created by the Albertine Rift, which stretches from the south of Lake Tanganyika to the north of Lake Albert in Uganda. Lake Albert is estimated to hold around 2.5bn barrels, according to Deloitte.
Total has a market cap of EUR 123bn.
By Katie McQue in London and Blanca Riemer in Paris