Mozambique’s highly promising LNG play has sparked a bidding war.



Thai state oil company PTTEP is proposing to trump Shell’s cash takeover offer for London-listed Cove Energy and its lucrative 8.5% stake in gas-rich Area 1.



PTTEP said it will make a £1.12 billion ($1.78 billion) cash bid valuing Cove’s shares at 220 pence each.



Shell’s 195p per share proposal last week valued the London-listed player at £992.4 million.



A spokesman for the supermajor declined to comment on whether it would increase its offer.



Shell said last week that it is also eyeing separate opportunities to acquire interests in Area 1, located in the Rovuma basin.



The other partners in the Mozambique offshore licence are operator Anadarko Petroleum, India’s Bharat Petroleum and Videocon, and Mitsui of Japan.



Meanwhile, other Asian suitors are circling Cove with Indian majors ONGC Videsh and Gail reportedly considering a joint £1.25 billion cash bid.



ONGC Videsh confirmed the companies are involved in the Cove sale process.



Japanese and South Korean players may also be interested in Cove after high-level visits by officials from government and industry to Maputo in recent months.



PTTEP president Anon Sirisaengtaksin said: “Cove¿ represents a strong fit and the proposed acquisition¿ is consistent with (our) strategy of leveraging the LNG value chain of the PTT group.”



A successful transaction would mark PTTEP’s entry into the highly prospective East Africa oil and gas play, he said, adding the company “is dedicated to using its extensive experience in building a gas-based economy for the benefit of Mozambique”.



Area 1 hosts the Windjammer, Barquentine, Lagosta, Camarao and Tubarao gas discoveries.



The finds so far are estimated to have recoverable resources of up to 30 trillion cubic feet, which could supply feedstock to between two and six liquefaction trains.



First LNG exports could start in 2018 from two trains sited in Cabo Delgado province.



After Shell made its offer for Cove, analysts at FirstEnergy Capital said the proposal was “fair” but cautioned it did not preclude “a higher cash offer from other¿ parties given the scale and nature of this de-risked gas play where the assets are strategically located close to demand centres”.