Mitsui Buys Into Gulf of Mexico Blocks

Japanese trading house Mitsui & Co said on Monday it has agreed to buy a 20 percent stake in four blocks in the U.S. offshore oil and gas fields in the Gulf of Mexico from Royal Dutch Shell for an undisclosed amount.

The move follows Mitsui's other investment decisions earlier this year including co-development of the Greater Enfield oil reserves off Western Australia and an $8 billion expansion of the Tangguh LNG project in Indonesia which is led by BP, taking advantage of the recent drop in commodity prices.

In its latest deal, Mitsui Oil Exploration Co will buy the 20 percent stake in four blocks in the Mississippi Canyon encompassing 93 square kilometres (40 square miles), located about 100 kilometers (60 miles) south-southeast of New Orleans, in the Gulf from a Shell subsidiary.

The recoverable resources of all the blocks are estimated to be more than 100 million barrels of oil equivalent, worth about $5.1 billion based on the current West Texas Intermediate crude futures price of about $51 a barrel. In addition, there is further exploration potential within the blocks which may contribute to further build up the reserves and continue production over the long term.

Production of crude oil and gas would utilize the existing near field infrastructure, which could help early commercialization at lower development costs, the company said. Water depth is approximately 1,300 meters (4,300 feet).

Production could start as early as 2019, a Mitsui spokesman said.

Last month, Mitsui announced a joint venture with Mitsui O.S.K. Lines (MOL) and AKOFS Offshore to enter the offshore support vessel market. The company has agreed to purchase the subsea support vessel Skandi Santos from the current shipowner through a three-way joint venture company called Avium Subsea which started business effective from November 23.