The announced US$33 billion merger between California-based Chevron Corporation and Texas-based Anadarko Petroleum will face a full antitrust review by the government of Mozambique, the country’s finance minister, Adriano Afonso Maleiane, told Capitol Intelligence in an exclusive interview.
Speaking to Capitol Intelligence on the sidelines of the IMF World Bank Meetings in Washington, Maleiane said the country will launch a full antitrust investigation into Chevron’s takeover of Anadarko as the target company is one the largest E&P operators in the southern African nation.
Specifically, Maleiane said he will require binding guarantees that the combined Chevron/Anadarko respect all undertakings regarding the payment of royalties and taxes as part of Anadarko’s production-sharing agreements and other investment commitments with the government of Mozambique.
The liquefied natural gas project that Anadarko’s been developing since discovering gas in the Rovuma Basin in 2010 will generate US$130 billion of revenue over its lifespan, according to the Mozambican Finance Ministry. Of that, the project’s owners will receive US$38 billion after taxes and costs, the ministry estimated in June.
According to World Oil, the Mozambique government should be concerned that Chevron may have a much lower risk appetite than independent operator Anadarko. The trade magazine noted that Chevron will likely raise concerns over the growing Islamist insurgency in northern Mozambique and the US$20 billion investment in the country by Anadarko, one of the largest private sector investments in Africa.
Thanks to its enormous natural gas reserves, many industry experts consider Mozambique the Qatar of Africa.
In fact, Mozambique is such a critically strategic market for the global oil and gas industry that it brought together the world’s top E&P operators such as China National Petroleum Company, Exxon Mobil and Italy’s ENI into a three-way production-sharing agreement.
The venture is so strategic that ENI CEO Claudio Descalzi, Exxon CEO Darren Woods and China National Petroleum Company (CNPC) chairman Wang Yilin held what could only be described as a high-level public “closed-door meeting” to discuss Mozambique on June 26, 2018, during the World Gas Conference in Washington, DC.
As a player in global exploration and production, CNPC, the seventh-largest oil company by market capitalization, is determined to be considered on the same level as Exxon Mobil, Royal Dutch Shell, and Chevron.
“CNPC chairman Wang Yilin used the World Gas Conference in Washington, DC, to show the world and their fellow oil company CEOs that they are players in the world’s most dynamic markets such as Mozambique,” an oil industry insider said.
The oil industry insider said that CNPC would be interested in acquiring Anadarko’s assets in Mozambique if they were forced to divest them in the proposed merger with Chevron.
Minister Maleiane also noted that Chevron CEO Michael Wirth and Anadarko CEO RA Walker failed to inform the government of Mozambique regarding the merger and that he was only informed of the merger via newspaper reports.
Oversight of important regulatory and antitrust approval will be handled by financial advisers Credit Suisse for Chevron and Evercore and Goldman Sachs for Anadarko, while Chevron has retained M&A lawyers Paul, Weiss, Rifkind; Wharton & Garrison LLP and Shearman & Sterling LLP while Wachtell, Lipton, Rosen & Katz and Vinson & Elkins LLP are M&A legal advisers to Anadarko.
“Completely overlooking Mozambique in this mega-deal is common among western M&A who miss the forest for the trees. I.e., looking at United States Federal Trade Commission (FTC) approval rather than an equally critical approval by the government of Mozambique,” a top energy M&A lawyer in Washington said.
Credit Suisse’s involvement as Chevron’s financial adviser could trigger Mozambique government hostility to the deal as they are suing the Zurich-based bank for its part in underreporting some US$2 billion in borrowing from the International Monetary Fund, a Mozambique Central Bank source told Capitol Intelligence.