Mozambique Oil & Gas: Rovuma Area 1 consortium about to close 85% of sales to invest in Mozambique LNG project

The Mozambican Area 1 natural gas project has secured and negotiated buyers for 7.7 million tons per year from a required total of nine for the final investment decision, a project source said.

The information was provided on Thursday by Omar Mithá, president of Empresa Nacional de Hidrocabonetos (ENH) of Mozambique, based on the contracts signed and being negotiated by the investor consortium (of which ENH is part) led by the US oil company, American Anadarko.

“If you add up to that, we already have 7.7 million tons [a year]. If you ask me the minimum amount for financing, there are nine, there are 1.3 million tons a year,” he summarized.

Mithá was speaking at a meeting promoted by ENH with local entrepreneurs in Pemba, capital of the province of Cabo Delgado, northern Mozambique, where the natural gas project of Area 01 will be implemented.

“If this [negotiations with customers] goes well, this wait-and-see thing is going to end, because we really have to buy gas: if we do not, there is no money” to finance the project, budgeted at 25 billion dollars .

“There has never been a single project in Africa”, he said.

Omra Mithá detailed some of the 7.7 million tonnes plots that are in sight.

A company is in Cabo Delgado this week to look at land in the Afungi peninsula, in the district of Palma, where the liquefaction plant for natural gas extracted from the ocean subsoil is to be built 40 kilometers from the coast.

“They are willing to buy 2.3 million tons per year,” he said.

Another 1.2m tonnes / year contract with a French multinational is about to be reviewed by the consortium, he added.

Thai company PTTEP (which holds 8.5% of the consortium in area 01) has already signed a contract to supply 2.1 million tonnes per year and the public company Electricity of France has also signed the purchase of 1.2 million tonnes for a period of 15 years.

The numbers represent an advance on the latest information that had been released by the company that leads the consortium.

In February, Anadarko announced it had guaranteed the sale of 5.1 million tons of gas per year, but only when it signed contracts for the sale of 8.5 million would it make the decision to invest, according to the Bloomberg financial agency.

At the time, the oil company was also in contact with companies in China, Japan, South Korea and Indonesia.

At the meeting in Pemba, Mithá said he understood “the discouragement” of some entrepreneurs who “had already invested in hotels, factories” in the region, “in the expectation of these projects”, by this time, already benefiting from the first gas discoveries in the area were made in 2010.

Despite the delay, “things are moving,” he added.

So much so that the industrial plan for the construction of gas liquefaction plant was approved in February, the resettlement of the population of the Afungi Peninsula has begun and the design of a new city in the zone will be known within days.

Omar Mithá said that the 18,000-hectare project for the construction of the future city of Palma, already designated in the business environment as the future gas city, could soon be submitted to the Council of Ministers.