Italian group ENI is expected soon to award a short-term floating platform construction contract for the processing of natural gas to be extracted in the Rovuma basin in northern Mozambique, trade publication “Upstream” reported.

The newspaper added that the contract is expected to be awarded to the Reef Consortium, composed by French group Technip, by JGC, formerly the Japan Gasoline Company and Samsung Heavy Industries of South Korea.

The newspaper also wrote that construction of the floating platform, transport and on-site installation is expected to cost the Italian group around US$5 billion.

However, before the contract can be awarded the other partners in the Area 4 block of the Rovuma basin – China National Petroleum Corporation (20 percent) and Galp Energia of Portugal, South Korea’s Kogas and the Mozambican state company Empresa Nacional de Hidrocarbonetos (ENH) Hydrocarbons, with 10 percent each – need to approve it.

The ENI group continues to say it plans to start the production of liquefied natural gas in 2019 but has not yet made the final investment decision, which is expected to happen in early 2016.

A major problem is that the price of gas is intrinsically related to the price of oil, which has dropped by over 40 percent in the last 12 months, in addition to new natural gas suppliers recently entering the market, putting downward pressure on prices.

Despite these problems, the Italian group has secured buyers for the natural gas due to be extracted in Mozambique and announced on 29 October it was about to conclude an agreement with the BP group. (macauhub/MZ)