15 Feb 2017 – Anadarko and ENI have agreed to give Empresa Nacional de Hidrocarbonetos (ENH), Mozambique’s state-owned oil and gas company, a funded carry agreement on its capex commitments for its stakes in the country’s two LNG projects, three sources close and one familiar with the situation told Debtwire.
The measure mitigates against ENH having to sell or reduce its stake-holdings in the assets for failing to meet their capex requirements, the sources added.
“ENI and Anadarko have agreed funded carry arrangements with ENH. They will cover ENH’s capex commitments for the project in return for a portion of ENH’s share of the revenues that will be generated when the projects are in operation,” the source familiar said.
“The carry arrangements on capex were negotiated when the contract for the exploitation phase as the Government wasn’t able to provide state guarantees as a way of underwriting the risks. Now the project has moved to development and those carry arrangements were renegotiated and kept on the license”, the first source close added.
In November, Debtwire reported Mozambique hired Standard Chartered to advise on the refinancing of two debt facilities totalling USD 2.6bn The two debt facilities were for the LNG projects. ENH has a USD 500m facility for the Area 4 project, which it has a 10% interest in, and a USD 2.1bn for its 15% stake of the Area 1 project.
On 18 January, Mozambique missed the first USD 59.8m interest payment on its 2023 Eurobond, making it the first African country to default since the Ivory Coast defaulted on its USD2.3bn government bond in early 2011.
The Mozambique government has also publically said it cannot afford to repay any of its debts until 2021, when it expects the LNG projects to be in operation.
Mozambique’s two LNG projects could provide a much-needed safety net for the country’s economy.
Area 4 has estimated reserves of 85 trillion cubic feet of gas (tcf), held in its two gas fields – Mamba and Coral. Area 4’s operator is Eni East Africa, which is a joint venture between Eni and the China National Petroleum Corporation (CNPC), where CNPC holds a 28.57% stake, which translates to a 20% stake of Area 4. Other stakeholders include ENH, Galp Energia and Kogas, who each hold stakes of 10%.
Area 1 has estimated reserves of 75 tcf of gas. The consortium holding the licence for Area 1 is made up of Anadarko, with 26.5% of the equity and also operatorship, ENH with 15%, Mitsui & Co with 20%, Thai state oil company PTTEP with 8.5%, and with (ONGH), Oil India Limited and Bharat Petroleum Corp each holding 10%.
by Katie Laura McQue and Priscila Azevedo-Rocha