UPDATE 1-Mozambique OKs PTT bid for Cove, despite Shell

Tue May 29, 2012 1:25pm EDT

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LONDON May 29 (Reuters) - Mozambique has approved Bangkok-based PTT Exploration and Production's $1.9 billion bid for UK-listed Cove Energy, the companies said on Tuesday, removing the risk Maputo could block the bid in favour of a lower one from rival Royal Dutch Shell plc.

Cove has an 8.5 percent stake in massive gas finds offshore northern Mozambique. Project leader Anadarko Petroleum plans to build large plants to freeze the gas to liquefied natural gas (LNG) for export in ships.

PTT sees Cove as an opportunity to secure energy resources to help power Thailand's economy. Shell hopes Cove will be a springboard to a major presence in east Africa.

Mozambique's government had given its approval for Shell to buy Cove and an official within Mozambique's minerals ministry told Reuters the government preferred a buyer with LNG expertise.

PTT had never previously built an LNG export plant, leading some Cove shareholders, mainly hedge funds after three months of Shell and PTT bidding and counterbidding, to fear a bar on the PTT bid.

This could have forced them to accept Shell's $1.8 billion bid. The government approval paves the way for continued bidding, which most shareholders had expected.

Cove shares closed at 257 pence on Tuesday, ahead of PTT's 240 pence per share bid.

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