Ophir says process under way to sell stake in Tanzanian gas field

BRITISH oil explorer Ophir Energy said a process was under way to sell part of its stakes in big gas fields off the coast of Tanzania, raising investor hopes that a long-awaited deal could be close.

An Indian media report had said Ophir, which raised over $800 million in a placing and rights issue in March to bolster its finances, was in talks to sell stakes in the Tanzanian fields to the Indian state-run gas company GAIL. GAIL declined to comment.

The Tanzanian fields that Ophir discovered with its partner BG Group, estimated to hold 15 trillion cubic feet of gas, are its prize assets.

The development of the liquefied natural gas (LNG) facilities required to exploit the fields will cost an estimated $10 billion, encouraging Ophir, a company worth $2.9 billion, to bring in a deep-pocketed partner.

"There is no certainty that this process will conclude successfully, nor can there be any certainty over the value of any such deal," Ophir said in a statement on Thursday.

Ophir flagged in March that its strategy was to look for partners to bring in to its fields.

Its lack of comment on the progress of a deal at the time of its half-year results in August worried investors, prompting chief executive Nick Cooper to request patience.

GAIL could face competition from other state-owned Asian companies.

"The Indians or the Chinese, the big state-backed oil companies, make sense. They've got the big cheque-books," VSA Capital analyst Dougie Youngson said.

Ophir said an update on the sale process would be provided as appropriate, adding that the deal related to areas off Tanzania known as blocks 1, 3 and 4 in which it owns 40 percent stakes.

Huge gas finds off both Tanzania and Mozambique have in recent years led to predictions that East Africa could become a big exporter of LNG, but development requires new investors.

This year Italy's Eni sold a 20 percent stake in its Mozambique offshore gas project to China National Petroleum Corp for $4.21 billion.

India's Oil and Natural Gas Corp agreed in August to buy a 10 percent stake in a gas field in Mozambique from Anadarko for $2.64 billion.