Mozambique Oil & Gas: Anadarko-led LNG project set for FID approval by 2019 as it seeks to make Mozambique a global gas supplier

mitch-ingram_750xx720-407-0-0U.S. oil and gas producer Anadarko Petroleum Corp said on Wednesday it expects to make a final investment decision in the first half of 2019 on whether to build the first liquefied natural gas export terminal in Mozambique.

Mitchell Ingram, Anadarko’s executive vice president, international, deepwater and exploration, said at the World Gas Conference in Washington, D.C., that the U.S. oil and gas producer was ready to move forward with the Mozambique project after lining up enough customers for the LNG.

Ingram said the company was in the process of converting the sales agreements into binding sales agreements and ramping up financing for the project.

“Once we complete that, we will be ready to make a final investment decision in the first half of 2019,” he said.

He spoke a couple of weeks after Anadarko and its partners in the Mozambique project signed sales agreements with units of Tokyo Gas Co Ltd and Centrica Plc.

That deal with the Japanese and UK energy companies calls for the delivery of 2.6 million tonnes per annum (MTPA) from the start-up of production in Mozambique until the early 2040s.

Other firms lined up to buy gas from the project include units of Electricite de France SA, Japanese utility Tohoku Electric Power Co Inc and Thailand’s state-run PTT.

Anadarko’s partners in the project include units of Mitsui & Co Ltd of Japan and ONGC Videsh of India, among others.

The Mozambique project, which is located between both the Asia-Pacific and European markets, will consist of two liquefaction trains with the capacity to produce 12.88 MTPA to support development of the Golfinho/Atum fields located entirely within Offshore Area 1.

Ingram said Anadarko managed to squeeze about $4 billion out of the cost of building the onshore part of the project, bringing the cost down to about $600 per tonne, which according to a Reuters calculation would bring the total to about $7.7 billion.

In the past, Anadarko has said it was looking to raise about $14-15 billion for the project. Officials at the company were not immediately available to comment on the latest total cost estimate.

The company has said it expects to complete the facility in the 2023-2024 timeframe.

As consumers shift from coal to cleaner burning gas for power generation and other uses, demand for LNG is expected to exceed supply in 2022 or 2023, according to a report from energy consultant Wood Mackenzie.

In 2017, global LNG sales rose 9.9 percent to a record 289.8 million tonnes, according to the International Association of Liquefied Natural Gas Importers (GIIGNL).

Anadarko made its first discovery in Offshore Area 1 in 2010. In total, Ingram said the company and its partners have discovered about 75 trillion cubic feet of recoverable natural gas in the field.

Ingram said this project paves the way for significant future expansion of up to 50 MTPA in the future. Anadarko has said the Golfinho/Atum project will also supply initial volumes of about 100 million cubic feet per day of natural gas for domestic use in Mozambique.

Communities relocation already started…

 

The consortium have already started relocating about 500 families from the site of where the plant will be, and has about 1,000 workers on site making preparations and building infrastructure such as roads. It plans to step up to 2,500 workers on site before the end of the year.

Anadarko has estimated the reserves in its Area 1 acreage off the coast of Mozambique at about 75tn cubic feet, implying a resource life of about 120 years at the initial production rate of 12.88m tonnes of LNG per year, but the consortium intends to expand the plant every five years to add more capacity.

Other companies are also planning to invest heavily in Mozambique’s gas sector. A consortium led by Eni of Italy last year gave the go-ahead to an $8bn floating LNG project called Coral, with a capacity of about 3.4m tonnes per year. ExxonMobil, which bought part of Eni’s Mozambique assets last year, is also looking at another onshore LNG plant.

Security concerns in the region have risen recently. Attacks by a mysterious group apparently of Islamic militants have killed at least 39 people and burnt hundreds of homes in the northern province of Cabo Delgado, which is where the LNG plant is being built.

Mr Ingram said the issue was “high on our agenda”, and the company was looking at its own security and working closely with the authorities.source: Excerpts from Reuters, FT included.

 

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