Total, a French oil and gas company, has agreed to buy a 40 per cent stake in a production sharing contract (PSC) in a field offshore Mozambique from Petronas Gas Bhd, a subsidiary of Petroliam Nasional Bhd (Petronas) for an undisclosed sum.
The two companies signed a farm-in agreement yesterday for the acquisition of the 40 per cent interest in the PSC covering the offshore blocks area 3 and 6, located in the prolific Rovuma Basin in Mozambique.
In a statement, Total said Petronas will retain the operatorship for the two blocks, covering an area of 15,250 sq km with water depths ranging up to 2,250m.
"An exploration well is planned by year-end," the company said.
Total senior vice president exploration and production Africa Jacques Marraud des Grottes said after Kenya and Uganda, the company is entering into the southern part of the prolific Rovuma Basin, whose oil potential might equal the gas potential of the northern part.
"The farm-in significantly strengthens our long-term presence in exploration and production in East Africa. Exploration wells are expected to be drilled shortly," he said, adding the transaction is subject to the approval of the Mozambique government.
Total has been present in Mozambique since 1991 through its petroleum product storage and marketing affiliate.
Total Mozambique markets fuels and lubricants to consumers and industry via two import terminals and a network of 35 service stations.
In October 2008, Petronas, together with Empresa Nacional de Hidrocarbonetos de Mozambique (ENH) was awarded the exploration and production concession contract (EPCC) for two exploration blocks, namely Area 3 and Area 6 by the Mozambique government.
Under the terms of the EPCC, PC Mozambique (Rovuma Basin) Ltd,a wholly-owned subsidiary of Petronas holds a 90 per cent interest in both blocks, which are located in the Rovuma Basin, while ENH owns the remaining 10 per cent interest.
Petronas first entered Mozambique's upstream oil and gas industry when it was awarded a contract for offshore Zambezi Delta Block in June 2002.