Page 7 - AfrOil Week 12 2023

AfrOil COMMENTARY AfrOil

Specifically, it is looking for expressions of inter- Mozambique LNG has already secured $14.9bn
est (EoI) from potential contractors that can of project financing, Rovuma LNG has not yet
provide FEED services for a number of 1.5mn made a final investment decision (FID). The lat-
tpy gas liquefaction modules. Bidders will need ter group could have a harder time clearing this
to turn in all required documents by March 31 hurdle, as the climate for financiers in the oil and
and will also need to show compliance with UK gas space has become more challenging.
and US anti-corruption practices. According to Energy Voice, Rovuma has
“Only the candidates providing the FEED secured funding from the US government’s
will be considered in a potential next stage for International Development Finance Corp.
the award of an EPC contract,” ExxonMobil said (DFC) and France’s Credit Agricole, but a shift-
in a statement. This is “subject to improvement ing LNG global marketplace could make financ-
of security conditions and a decision on return ing the project difficult.
of activities in the Afungi [Peninsula] area.” Meanwhile, even if an FID is made this year, Even if an FID
it will be several years before Rovuma LNG can
A financial lifeline start production, and headwinds are expected is made this
For Mozambique, getting the stalled LNG pro- to be strong for the sector in the latter half of the
jects back on track is imperative, given the coun- decade. According to the Institute for Energy year, it will
try’s financial struggles. LNG export revenues Economics and Financial Analysis (IEEFA),
would be a huge boon for the southern African a tidal wave of new projects will come online be several
country in servicing its debt, which includes a starting in 2025, with the addition of 64mn tpy years before
$900mn Eurobond. of liquefaction capacity. The supply additions
In fact, the potential investments in the will raise global LNG capacity by about 13% in Rovuma LNG
LNG projects might even exceed the country’s just one year.
national annual output. Initial investments for This means that projects such as Rovuma can start
Rovuma are predicted to be around $500mn to LNG that are likely to come online after 2026
advance midstream and upstream early project will be entering a smaller demand pool, as new production
activities, including development of a construc- supply will have already flooded the market,
tion camp, resettlement activities, building an creating a supply glut and as a result lower than
airstrip and access roads and detailed engineer- anticipated prices, tighter margins and dimin-
ing work on the LNG plant. ished profits.
Mozambique began exporting LNG in Similarly, prospects in several markets for
November 2022, with the first cargo loaded LNG are beginning to look more challenging.
from the Coral Sul floating LNG (FLNG) ves- China appears to be relying more heavily on
sel moored at Area 4. The FLNG unit is oper- pipeline gas from Russia. Meanwhile in Europe,
ated by Coral South LNG, a consortium led countries are accelerating towards net-zero tar-
by Eni (Italy) and in which ExxonMobil owns gets, with wind and solar projects anticipated to
a non-operating stake. The vessel is capable of play a bigger role in the energy mix in the latter
producing 3.4mn tpy of LNG. half of the decade.
Indeed, Rovuma LNG has experienced a
Overcoming hurdles roller-coaster ride so far, and additional hurdles
With confidence growing around the secu- will need to be cleared. However, steps are being
rity situation, the next obstacle to overcome taken in the right direction and it could mark a
for the Rovuma project is financing. While transformative phase for Mozambique. ™

Rovuma LNG will process gas from the Mamba section of Area 4 (Image: Galp)

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