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3. Projects in Mozambique

LNG PROJECT

Due to the discovery of over 180 tcf of natural gas reserves in the Rovuma basin by Texas-based Anadarko (Area 1) and Italian firm ENI (Area 4), Mozambique is expected to become a major exporter by 2023.  Anadarko will build an LNG plant to process the gas they discovered in Area 1, off the northern coast of Mozambique near the border with Tanzania.  It selected a joint venture of developers that includes Mc Dermott (USA), Saipem (Italy) and Chiyoda (Japan) to construct the Afungi LNG Park valued at USD 25-30 billion.  Anadarko expects to conclude several sales and purchase agreements (SPA) by year-end for liquefied natural gas (LNG) and to announce its final investment decision in 2019.

 

On June 1, 2017, ENI announced the final investment decision amounting to USD 8 billion for the construction of six subsea wells connected to a Floating Liquified Natural Gas (FLNG) production facility in Area 4, which is due for completion in mid-2022.  The Engineering Procurement and Construction (EPC) contract was officially awarded to a consortium composed of TechnipFMC, JGC, and Samsung Heavy Industries.  Furthermore, in 2018, ExxonMobil  acquired from ENI a 25% indirect interest in the Area 4 block.  As part of this agreement, ENI will lead all upstream operations, and ExxonMobil will lead the construction and operation of liquefaction facilities onshore to be located in the Afungi LNG Park. 

 

Mozambique’s National Petroleum Institute has awarded four concessions for petroleum exploration and production in offshore blocks in the Angoche and Zambezi Basins and in onshore blocks in the Mozambique Basin to four separate consortiums led by ExxonMobil, Sasol, ENI, and Delonex Energy (U.K.).  However, none of the operators have started exploration or production activities, as agreements are still under negotiation  with the government.  

 

Empresa Nacional de Hidrocarbonetos (ENH), the state-owned hydrocarbon company, represents the Mozambican Government in petroleum operations.  The law stipultates that ENH participate as a stakeholder in petroleum production operations, as well as exploration projects.  ENH is also engaged in other national flagship projects, such as the oil and gas terminal expansion in the Port of Pemba, and the urbanization of the district of Palma, where the Area 1 and 4 natural gas business activities will be concentrated.  In partnership with the Korean gas company Kogas, ENH is also operating a gas distribution network to provide households and industry with piped gas in the south of Mozambique.

 

The Government of Mozambique has determined that a portion of the Rovuma Basin natural gas production should be used locally to address the needs of the domestic market, and the Ministry of Mineral Resources and Energy launched a tender to identify companies interested in developing industrial projects to use the gas.  Norway’s Yara International was granted an allocation of 80-90 mcf/d of gas to produce 1.2-1.3m t/yr of fertilizers.  Additionally, Royal Dutch Shell’s Gas to Liquid (GTL) project will produce 38m b/d of liquid fuels such as diesel, naphtha, and kerosene. Finally, a Kenyan group, GLA, was awarded a concession to build a 250MW power plant.  There is uncertainty as to whether the off-take to which the government is entitled will be sufficient to provide natural gas to all three projects during the first phase of operations.

 

Source: https://www.export.gov/article?id=Mozambique-Oil-Gas