China, which currently has Angola as one of its main oil suppliers, plans to position itself to have Mozambique as a major source of natural gas supply in the future. To secure funding for the large investment required for the extraction and export of natural gas, US oil company Anadarko Petroleum is already in the market negotiating long-term contracts and one of the first five it closed, according to financial news agency Reuters, was with the China National Offshore Oil Corp (CNOOC).
Chinese state oil company CNOOC negotiated the yearly purchase of between 2 million and 2.5 million tons of gas, a quarter of the production capacity of the first liquefaction unit associated with Area 1 of the Rovuma Basin, whose operation is led by Anadarko.
The interest of Chinese oil companies in the natural gas from Mozambique previously resulted in Sinopec purchasing a 20 percent stake in Area 4, next to the area operated by Anadarko, from Italian oil company ENI for US$4.2 billion.
The deal is a way of mobilising resources for investment and also increasing China’s appetite for natural gas production.
A source connected to Area 1 told Reuters that the terms of the agreement with CNOOC were outlined some time ago and were now waiting for a “final investment decision on the project.”
China has the world’s fastest growing natural gas market and the country has also signed contracts in the United States and may now take a prominent role in Mozambique.
The Africa Monitor newsletter said the president of Anadarko Petroleum, Al Walker, formally announced to the authorities, on a trip to Maputo a few months ago, that buyers had been guaranteed, all of them in Asia, for two thirds of the production of the liquefaction unit that is under construction.
Other preliminary agreements that have been signed include one by the United Arab Emirates, and the remainder from Asia: Indonesia’s Pertamina, PTT of Thailand, as well as Japan and India.
The first liquefaction unit in Area 1 of the Rovuma Basin will have a production capacity of close to 10 million tons from 2021, representing an investment of US$23 billion.
The Standard Bank reported that natural gas exports would provide Mozambique with income of US$67 billion with six liquefaction units in operation income would reach US$212 billion.
Anadarko Petroleum’s partners in Area 1 are Mitsui, Oil India Limited, Bharat PetroResources, PTT and Mozambican state oil company ENH.
Recently, the government of Mozambique increased its projections of the natural gas in the Rovuma basin from 170 trillion to 200 trillion cubic feet.
I relation to the development of oil and gas projects in the Rovuma basin, Mozambique’s Minister of Natural Resources, Esperanca Bias, pointed to a minimum investment of US$5 billion for its inception, but this “will rise with the planned [natural gas liquefaction] factories in Palma.” (macauhub/CN/MZ)