Mozambique Oil & Gas: Natural gas exploration to have final investment decision

The projects that could transform Mozambique into one of the world’s largest producers of natural gas are about to begin, with some of the largest groups in the sector, such as the China National Petroleum Corporation, looking to Asia as the market for their products.

The Africa Monitor Intelligence (AMI) newsletter wrote that the final investment decision for the Coral FLNG (Area 4, Rovuma basin) project should be made in the short term, after the consortium members – ENI of Italy, China National Petroleum Corporation, Galp Energia from Portugal, Kogas from South Korea and Mozambican state-owned Empresa Nacional de Hidrocarbonetos – made individual announcements in 2016.

The individual decisions depended on obtaining financing conditions, now practically secured, which according to the newsletter published in Portugal depended in turn on obtaining marketing contracts for at least 80% of the natural gas production, which has already been achieved.

US group ExxonMobil last March became one of the consortium members after it agreed to purchase 25% of the block for US$2.8 billion from ENI East Africa, a subsidiary of the Italian group working as the operator, a deal that raised expectations regarding the development of the project due to the size of the new partner.

The Area 4 block should contain close to 140 billion cubic feet of natural gas, and its exploration will involve construction of a floating liquefaction unit.

The project, according to Africa Monitor Intelligence, involves the construction of a floating natural gas liquefaction unit, an intermediate project to speed up gas revenues, built by the KD consortium, which brings together US companies KBR Inc. and South Korea’s Daewoo Shipbuilding & Marine Engineering (DSME) Co. Ltd.

The project also includes a 45-kilometre gas pipeline that will transport the gas from the extraction platform to the onshore processing plant, currently being planned by the ENI and Anadarko Petroleum groups and it is also estimated that ExxonMobil will acquire part of the consortium that will manage the process of transport/export of the processed gas onshore.

Africa Monitor Intelligence also reported that ExxonMobil is now a potential buyer of the assets of Anadarko Petroleum, the main shareholder of the other major development project in the Rovuma Basin – Area 1 – and in the medium term is expected to become the main gas player in Mozambique.

The Anadarko Petroleum group owns 26.5% of the consortium, which is also owned by ENH, with 15%, Mitsui E&P Mozambique Area 1 Ltd. (20%), ONGC Videsh Ltd. (16%), Bharat PetroResources Ltd. (10%), PTT Exploration & Production Plc (8.5%) and Oil India Ltd (4%).

The AMI newsletter reported that the US group has little vocation for selling production, focusing its activity on the prospecting and subsequent sale of assets, but it is expected that it will keep a minority position in the bloc.

The final investment decision for this project has been delayed far beyond the initial plans, with a construction period of four years until natural gas production and export begins.

The Asian market, where consumption of natural gas has been registering higher levels of growth, has been the target of the two major natural gas projects in the Rovuma basin.(Source: Macauhub)