Maleiane said the Exxon-led Area 4 onshore project
could make FID in 2018-2019, while the Anadarko-led Area 1
onshore LNG project – which until now was assumed to be the more advanced of the two – is not expected to make FID until the first quarter of 2019.
It would be “bizarre” if Exxon’s project took FID this year, said one African energy analyst, “unless they plan to finance the entire thing off balance sheet, rather than project-finance it”.
The Area 4 partners do intend to use project finance, however. Last week, Mozambique Rovuma Venture – the joint venture between Area 4 operators Eni and Exxon – tendered for expressions of interest from international law firms to advise on arranging the debt.
Given that Area 4 still needs to pull together the financing package and find offtakers for the plant’s LNG, “our view is that next year is more likely for FID”, Jon Lawrence, a research associate with Wood Mackenzie, told Interfax Natural Gas Daily.
“LNG marketing on Area 4 is still in the fairly early stages. ExxonMobil have a marketing team in Singapore to cover the Asia Pacific region, and Eni has been building out its team there,” he said.
However, because Eni and Exxon are portfolio players, “they have the advantage of being able to lift some of the LNG volumes themselves – that’s a real asset that Anadarko doesn’t have”, Lawrence added.
Anadarko’s project still looks more advanced on paper. The plan of development for a 12.9 mtpa onshore LNG plant was approved in February, and the company has agreed key terms for more than 5 mtpa of offtake – including a 1.2 mtpa deal with EDF and a 2.6 mtpa agreement with Thailand’s PTT. However, the first quarter of 2019 still looks optimistic for FID.
Exxon has still not submitted a plan of development for its project to the government, but it is expected to do so soon. Sources in Maputo say the company plans to build two 7.8 mtpa trains – the same capacity as its mega-trains in Qatar.
It is possible Exxon could leapfrog Anadarko in taking FID even if a decision is not reached this year. “Exxon is an experienced greenfield LNG operator, and the Area 4 partners have strong balance sheets, which will help in leveraging finance,” said Lawrence.
No major revenues until 2028
Mozambique’s government has downgraded estimates for when it expects significant revenues to start flowing from the projects, even if the companies take FID early next year.
While the government expects Eni’s 3.4 mtpa Coral FLNG project to start exporting in the second half of 2022 – and for gas exports to reach 18 billion cubic metres per year by 2024 – the state’s initial income from LNG will initially consist only of withholding tax and revenues from profit-sharing agreements “and therefore will remain limited”, said Maleiane.
The minister told creditors that significant government revenues from corporate income tax will kick in only in the late 2020s or early 2030s “under a best-case scenario” – so they would need to wait until at least 2028 for the country to make any significant payments toward the principals of its loans.
According to Tuesday’s presentation, combined government revenues from areas 1 and 4 will remain below $1 billion per year until 2031, after which revenues should be more than $2 billion per year and reach $3 billion in 2040.
These figures differ widely from estimates in a presentation given by Maleiane to creditors in October 2016, when he estimated government revenues should increase by $2 billion per year from the gas projects from 2021 and could rise as high as $6 billion by 2023.
But these latest projections could be too pessimistic. “Even taking into account cost recovery, 2032 seems pretty late to us, and doesn’t seem in line with what Eni and Exxon have been saying in their investor presentations,” said Lawrence.source: INTERFAX