LONDON — The Italian oil company ENI said Wednesday that it had made new natural gas discoveries in the waters off Mozambique, a find that will help consolidate ENI’s position as one of the leaders in the hot new East Africa region.
Offshore Mozambique, where ENI’s discovery is located, ranked third in the world in terms of oil and gas discovered last year, after the Santos Basin in Brazil and Iraqi Kurdistan, according to Mansur Mohammed, an analyst at Wood Mackenzie in Edinburgh.
The finds — from the sixth and seventh wells that ENI has drilled — add an additional 6 trillion cubic feet of gas to what ENI has already found. That is a large amount of gas but is dwarfed by the 68 trillion cubic feet that ENI now says it has found in its exploration concession called Block 4, where ENI has a 70 percent shareholding.
Three other shareholders — Galp Energia of Portugal, Kogas of South Korea and ENH, the Mozambican national oil company — each hold 10 percent.
The total amount discovered is equivalent to about 12 billion barrels of oil. A high proportion is likely to be recoverable, ENI said.
According to industry estimates, ENI’s share of the Mozambique discoveries could be worth around $15 billion.
The ENI finds coincide with an effort by the company’s chief executive, Paolo Scaroni, to focus more on exploration and production. In an interview, Mr. Scaroni said that ENI’s exploration activities in Mozambique would come to about $700 million. When you make a business of exploration and are “successful you make a huge amount of money,” he said.
ENI first found gas in Mozambique last year, closely following a discovery by Anadarko Petroleum of the United States.
The two companies are now negotiating with the government on a development plan. The biggest money earner is likely to be exporting gas to Asia as liquefied natural gas. The Web site of the Mozambique Instituto Nacional de Petroleo, the energy ministry, has a presentation that indicates that as many as 10 LNG plants or trains could be built, which would make Mozambique a very large player in the world gas market.
Mr. Scaroni said there could also be a role for a floating LNG facility, a technology that Royal Dutch Shell is now developing for use off western Australia. Shell recently tried to buy Cove Energy, which had a small position in the Mozambique discoveries, but was outbid by Thailand’s PTT Exploration and Production.
ENI is not a major player in LNG and may need help with the huge capital costs for developing the gas, which Mr. Scaroni put in the “tens of billions” of dollars.
Anadarko is also not an LNG specialist. It is widely thought in the industry that the companies will bring in partners.
Mr. Scaroni said he had been talking to potential partners “but we are fairly reluctant to strike a deal with anybody until we finish our exploration.”
A recent report by Bernstein Research says that Mozambique will be “ENI’s most significant project, although we do not expect production until 2019 at the earliest.” Bernstein estimates that the internal rate of return for Mozambique LNG will be a substantial 27 percent.
The gas discoveries off Mozambique are contained in sandstone deposits in what were ancient river beds, similar to those off West Africa and elsewhere.
What makes the Mozambique discoveries particularly rich is that the sandstone layers containing the gas are particularly thick. One of the wells ENI drilled, called Coral 2 found gas-bearing rock 140 meters, or almost 460 feet, thick — an exceptional amount.
“Mozambique is a very positive exploration story,” Mr. Mohammed of Wood Mackenzie said. “We are talking about an unprecedented high exploration success rate that transformed the outlook for the region.”
This article has been revised to reflect the following correction:
Correction: December 5, 2012
An earlier version of this article misspelled the first name of ENI’s chief executive. He is Paolo Scaroni, not Paulo.
ENI Announces Major Gas Find Off Mozambique
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ENI Announces Major Gas Find Off Mozambique
