Italian oil firm Eni has announced another resources estimate hike to its massive offshore gas find in Mozambique, boosting its prospects of making a quick recovery from a year hit by production losses in Libya, poor refining results and weak European demand.
Further drilling at the Mamba North 1 prospect in the Block 4 concession – where Eni is drilling its deepest ever offshore wells – has uncovered mineral potential of 212.5 billion cubic meters (7.5 trillion cubic feet) of gas in place.
This new discovery, in addition to the Mamba South discovery from October 2011, further increases the potential of the Mamba complex in the Area 4. It is estimated that the total volume of gas in place reaches now about 850 billion cubic meters (30 tcf).
Eni CEO Paulo Scaroni said “the huge discovery at Mamba in Mozambique paves the road for extraordinary development opportunities in Asia, where the demand for gas is growing consistently. We’ve also enhanced our presence in areas with a high production potential, such as the Barents Sea, Angola and the South West Pacific.”
The Mamba North 1 discovery, located in water depths of 1,690 meters, reaches a total depth of 5,330 meters and is located approximately 23 Km north of Mamba South 1 discovery and 45 Km off the Capo Delgado coast. The discovery well encountered a total of 186 meters of gas pay in multiple high-quality Oligocene and Paleocene sands.
Eni – which has a 70% working interest in Block 4 – says that during the production test, the first performed at offshore Rovuma, the well produced high quality gas with flow rates, constrained by surface facilities, of about 1 million cubic meters a day and minor volumes of condensates. In a final production completion configuration, estimated gas production per well is expected to reach over 4 million cubic meters a day.
During 2012, Eni plans to drill at least other five wells in nearby structures to assess the upside potential of Mamba Compex.
The news comes as Eni announced a 10% year-on-year drop in profit for the last quarter of 2011, with profit at €17.97 billion ($23.6 billion) for the full year (up 4%); €4.26 billion ($5.6 billion) for the quarter (down 10%).
Losses on refining and a collapse in the gas prices took a chunk out of healthy profits from the crude upstream side of the business, which was buoyed by high prices. Eni imports gas on long term oil-linked contracts from Gazprom which became uncompetitive as spot prices weakened in late 2011.
The company, which is targeting an output growth of 3% per year to 2014, said hydrocarbon production in A4 2011 fell year on year to 1.68 million barrels per day, down 14%.
The company was badly hit by the loss of Libyan production in 2011, where it produced 270,000 barrels per day of crude from four onshore and two offshore fields before the war and ran the Greenstream gas pipeline to Sicily, accounting for 15% of the company’s total production. 80% of the Eni’s Libyan output is now online, and the company sees full restoration to pre-war production levels in the second half of 2012. The company aims to eventually double production in Libya.
“The resumption of production activities in Libya in record time mitigated the impact of the Revolution on 2011’s annual results,” said Scaroni. “The difficult situation in Italy and in Europe had an impact on our Gas & Power, Refining & Marketing and petrochemical results. Nonetheless, ENI, thanks to its excellent strategic placement, will continue to generate top industry results and to create long-term value for shareholders.”
