PTT Exploration & Production has taken on Royal Dutch Shell. Thailand’s state-controlled oil and gas company on Friday offered £1.1bn ($1.7bn) for Cove Energy, beating Shell’s agreed bid earlier this week.
Cove shares leapt by up to 25 per cent to over 240p – well above PTT Exploration’s 220p bid and Shell’s 195p offer – as investors bet on other potential buyers emerging or Shell raising its price. Whatever happens, PTT’s move shows that Chinese and Indian companies are not the only EM players in the global natural resources game.
PTT – market cap $20bn – is showing some spirit in challenging Shell – market cap $230bn – even if the Thai company has behind it the resources of the government, its 65-per-cent shareholder.
And money isn’t everything. With Cove’s key asset being its 8.5 per cent interest in Mozambique’s Rovuma offshore gas basin, a lot will depend on whom Maputo wants as a partner.
The operator of Rovuma is US-based Anadarko Petroleum, with a 36.5 per cent working interest. Mitsui, the Japanese trading group, two Indian oil groups and Mozambique’s state oil company Empresa Nacional de Hidrocarbonetos own the rest. Even though Cove’s stake is modest, Mozambique will want an investor who brings skill, technology and experience to bear to help develop Rovuma as an LNG project of global significance.
On this point, Shell, a world leader in LNG, is way ahead. But as the FT reported, PTT operates more than 3,000km of onshore and offshore gas transmission pipelines including an LNG importation terminal servicing Thailand’s demand for natural gas. It said on Friday that the purchase of Cove’s interest in a large upstream asset would complement its existing downstream interests in power generation, petrochemical, and transportation.
Global energy technology star or not, Shell will have to dig deeper into its pockets to stay in the game.
Related reading:
Cove Energy, Lex
Shell: £1bn entry into Mozambique, beyondbrics
Cove Energy gets go-ahead for secret auction sale, FT
Oil & gas: Eastern Promise, FT
The LNG and the short of it, Lex, FT
Stefan Wagstyl
Josh Noble
Rob Minto
Pan Kwan Yuk
Jonathan Wheatley
Heba Saleh