UPDATE 2-Eni opens up Mozambique gas riches to China
* Agrees to sell stake for $4.21 bln
* Eni will keep 50 pct stake
Eni agrees to develop shale gas in China
(Adds analysts, background, shares)
By Stephen Jewkes
MILAN, March 14 (Reuters) - Italian oil and gas major Eni opened up Mozambique's gas riches to China on Thursday when it agreed to sell a 20 percent stake in its giant Mozambique gas field to China National Petroleum Corporation for $4.21 billion.
The deal, still subject to approval by Mozambique authorities, will leave Eni with a 50 percent stake in the field which is the Italian company's biggest ever gas discovery.
"It's great early monetisation on what is a world-class project and helps reduce Eni's risk exposure to the area," said Jason Kenney, oil analyst at Santander.
The deal connects one of the planet's biggest untapped gas resources with its fastest growing gas consumer and could accelerate the onset of competition with Australian supplies of LNG for Asian markets.
Eni, the biggest foreign oil producer in Africa, will hold a strategy meeting later on Thursday with analysts focusing on shareholder remuneration after a series of disposals in recent months.
Last week, a source told Reuters CNPC, parent of Hong Kong and New York-listed PetroChina, was in talks to buy a 10 to 20 percent stake in the field.
Eni's Area 4 prospect is in the same Rovuma reservoir as a field owned by U.S. explorer Anadarko Petroleum Corp and several other investors.
Anadarko and Indian tycoon Venugopal Dhoot are selling a 20 percent stake in the field known as Area 1.
Eni and Anadarko have said they plan to unite their neighbouring gas fields off Mozambique's coast, boosting the development prospects of one of the world's most significant new energy projects.
The Rovuma field holds around 150 trillion cubic feet (tcf) of gas, enough to supply Germany, Britain, France and Italy for 15 years.
Eni estimates gas in place in its prospect is around 75 tcf.
The state-controlled major has previously said it was looking for partners to help fund the estimated $50 billion it will take to bring the African country's offshore field to production.
Sources have said other oil majors like ExxonMobil, Chevron Royal Dutch Shell and Total had held talks about taking a stake in Eni's Mozambique field.
But a deal with these larger companies might have threatened Eni's ownership of a project that is crucial to its future.
Shell tried and failed earlier this year to buy a company that holds a stake in the Anadarko block. Thai group PTT eventually won the contest for Cove Energy with a $1.9 billion bid after Shell backed away from a bidding contest.
The other shareholders in Eni's Area 4 prospect are Empresa Nacional de Hidrocarbonetos de Mocambique, Korea's Kogas and Portugal's Galp Energia, each with a 10 percent stake.
CNPC, China's biggest energy company, already has gas and LNG joint ventures in place with Shell in Australia, China and Canada.
"There may be some potential for coordination as Shell has also expressed interest in Mozambique...," said RBC Capital Markets in a note, adding the deal implied a transaction price of $2.25/barrels of oil equivalent.
Eni has said it intends to build liquefied natural gas terminals in Mozambique to ship the gas to energy-hungry markets in Asia with China a key market.
China is the world's second-largest oil consumer and its top state-owned energy firms have been aggressively expanding on the international stage as they look to secure energy supplies to feed the country's rapid growth.
"The deal brings on board a world class partner keen to develop Mozambique resources. Importantly, they'll bring access to the Chinese supply chain," said Kenney.
In the statement, Eni said it had also signed an agreement with CNPC to develop the Rongchang shale gas block in China.
The block covers about 2,000 sq km (770 sq miles) in the Sichuan Basin, close to the main consumption markets in China.
Eni, which has shale-gas agreements in countries like Poland, Ukraine and Vietnam and which already has a shale agreement with China's Sinoptec, has said it is keen to develop its business in this area.
(Reporting by Stephen Jewkes. Editing by Jane Merriman)