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Anadarko links Mozambique LNG sales to US price

03.25.2014  | 

Anadarko Petroleum has signed new agreements to sell natural gas from Mozambique at a hybrid price linked to both oil and United States natural gas prices, CEO Al Walker said.

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By BRADLEY OLSON
Bloomberg

Anadarko Petroleum has inked deals to sell gas from Mozambique at a hybrid price linked to both oil and US natural gas prices, CEO Al Walker said.

The global explorer reported discoveries off the coast of Mozambique that may contain 70 Tcf of natural gas. It has signed initial agreements with some buyers to sell the gas using a formula that combines Henry Hub and world oil prices and factors in costs for shipping and treatment,Walker said.

The formula is producing a price for LNG,similar to the oil linked indexes used now in Asian trading, he said at the Howard Weil Energy Conference in New Orleans.

“As a producer, I’m not as sensitive to that as the buyer,” Walker said of the pricing models.“We’re fairly indifferent between the two.”

The price of gas sold from seaside export terminals has emerged as a critical issue as the industry races to capture markets in Asia where gas sells for five times more than in North America. Producers are seeking deals linked to high priced oil to justify projects capable of liquefying the gas for shipment and regassifying it that can cost as much as $50 billion.

Anadarko expects to see first production from the Mozambique fields in 2018, and Walker has said the country will emerge as the world’s third largest natural gas producer.



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