Royal Dutch Shell has agreed to buy Mozambique-focused explorer Cove Energy for the equivalent of 1.37 billion euros.
Cove’s directors recommended the offer to their shareholders after Shell raised the price, matching a rival bid from Thai state-controlled oil firm PTT Exploration and Production.
The deal – which needs the approval of Mozambique’s government – will give Shell access to East Africa’s huge gas reserves.
The region is tipped to become a major natural gas producing region supplying liquid natural gas to energy hungry Asian markets.
Shares in Cove traded above Shell’s offer price, signalling investors are hopeful of a higher bid.
PTT Exploration and Production said it is “currently considering its options and will make a further announcement as and when appropriate”.