Anadarko and Videocon Eye Gas Stake Sale

Anadarko Petroleum, the US oil and gas explorer, and Videocon, the Indian conglomerate, are to hold an auction for a 20 per cent stake in a huge Mozambique natural gasfield that could raise more than $4.5bn.

The bidding process is likely to attract interest from many of the world's largest oil companies, including Royal Dutch Shell, according to people familiar with the process. Shell attempted to buy a stake in the same field last year.

State-backed oil groups from both India and China, including Oil & Natural Gas Corporation, India's state-backed energy explorer, are also expected to be interested in bidding.

The sale comes amid frenzied energy industry interest in east Africa, following a series of huge gas discoveries in the Rovuma Basin off the coasts of Mozambique and Tanzania.

Mozambique's 100tn cubic feet of gas reserves and proximity to energy-hungry Asian markets mean it is likely to become a major exporter of liquefied natural gas in the coming years.

Anadarko, which has little experience of LNG, was long expected to sell some of its 36.5 per cent stake in the field. Oil companies often form partnerships to share the massive costs of big integrated gas projects.

Videocon, a Mumbai-based conglomerate with interests ranging from telecoms to retail in addition to a number of oil and gas stakes, confirmed on Tuesday that it had hired two investment banks to manage the sale process, with initial bids expected by March 14. Videocon plans to sell the entirety of its 10 per cent holding.

"Standard Chartered and UBS are talking on our behalf to various parties. It will not be proper for me to disclose to whom," Venugopal Dhoot, Videocon's billionaire chairman, told Indian cable news channel CNBC-TV18.

Last July, Shell dropped out of the bidding for an 8.5 per cent stake in the field owned by UK-based Cove Energy, which was then bought by Thai oil and gas group PTT Exploration and Production for $1.9bn.

This valuation implies that a 20 per cent stake would be worth at least $4.5bn, although Mr Dhoot said he expected bids at a higher level as more gas had been discovered in the field since the conclusion of the PTT deal.

"There is a lot of interest around the world," he said. "It is not proper to disclose my price, but it should be a very high price."

Indicative bids are now expected to be made by a number of global private sector and state-backed oil companies. "It is a huge field, and there are a lot of the western global oil majors who want to take a stake, while there will be companies from China and Japan eyeing it too," said Dayanand Mittal, energy analyst at brokerage Ambit Capital in Mumbai.

"I'd have thought many of the supermajors will be interested, and also some of the big Indian groups, like OVL [the international arm of ONGC] and Indian Oil, would also have an interest given the field's proximity to India," said one energy analyst familiar with the process, speaking on condition of anonymity.

UBS and Standard Chartered declined to discuss their involvement in the deal. Shell also declined to comment.