Page 6 - AfrElec Week 45

AfrElec COMMENTARY AfrElec
Mozambique’s LNG players note progress
Comments from this week’s Africa Oil Week conference highlight steps being taken by Mozambique’s LNG developers as the country’s nascent LNG industry takes shape
MOZAMBIQUE
WHAT:
Mozambique’s LNG industry is gaining momentum
WHY:
Total is looking
at expanding its Mozambique LNG project plan, while state-owned ENH is seeking financing and new markets
WHAT NEXT:
The first of Mozambique’s new LNG projects is set to enter production in 2022
MOZAMBIQUE’S state-owned oil company Empresa Nacional de Hidrocarbonetos (ENH) has laid out plans to court investors for $1.5bn of financing for the Mozambique LNG project. The news comes the same week that France’s Total, the project’s operator, has said it is aiming to expand the project by developing two further trains on top of the two already planned for the terminal.
“We’re starting to look at studies for Train 3 and Train 4, because the resources are clearly there to develop,” Total’s head of exploration and production for Nigeria, Mike Sangster, told the Africa Oil Week conference in Cape Town, South Africa, this week.
ENH’s CEO, Omar Mitha – whose comments were also reported from Africa Oil Week – said the company would kick off a funding roadshow in Johannesburg, South Africa, next week before moving on to London. The company holds a 15% stake in Mozambique LNG and is seeking the funds to finance its share of the project’s development costs. Mitha told Bloomberg that ENH had previously resorted to a “backstop” optiontohaveitspartnersfundthestake.It“was a kind of bridge funding from our partners with the proviso that ENH would go to the market- place” to seek better terms and relieve them of the debt, he said.
ENH is targeting all banks as well as private equity players, according to Mitha.
Changing hands
Mozambique LNG has undergone two own- ership changes since the final investment deci- sion (FID) on it was taken by previous operator Anadarko Petroleum in June. The company at this point had already agreed to be taken over by Occidental Petroleum in a transaction valued at $55bn, including the assumption of debt, that closed in August.
Prior to the closing of that deal, Occidental had agreed to sell Anadarko’s African assets to Total for $8.8bn once it took them over.
Total announced in late September that it had closed the acquisition of Anadarko’s 26.5% operated interest in the Mozambique LNG pro- ject for $3.9bn. Sangster said this week that the company expected to close its acquisition of
Anadarko assets in Ghana and Algeria in early 2020, once the necessary regulatory approvals were received.
Total’s chief financial officer, Jean-Pierre Sbraire, described Mozambique LNG as a “jewel” in Total’s acquisition of Anadarko’s Afri- can assets in the company’s third-quarter earn- ings call last week.
Describing the project at the time that it closed the deal, Total said it would include the development of the Golfinho and Atum fields, located within Mozambique’s Offshore Area 1. The first phase of the project also includes the construction of a two-train liquefaction plant with a capacity of 12.9mn tonnes per year (tpy).
Offshore Area 1 is estimated contains more
than 60tn cubic feet (1.7tn cubic metres) of gas
resources, of which 18 tcf (510bn cubic metres)
will be developed along with Mozambique
LNG’s first two trains. Sangster’s latest comments
illustrate the fact that the project’s developers are to become a now evaluating plans to tap the remainder of the
resource.
Sangster said costs for the Mozambique pro- jectwere“verycompetitive”,withgoodterms.
The other partners in the project are Mitsui
with a 20% stake, ONGC Videsh Ltd (OVL),
Beas Rovuma Energy Mozambique – a joint ven- second largest ture between OVL and Oil India Ltd (OIL) – and
Bharat PetroResources Ltd (BPRL) with a 10%
interest each, and Thailand’s PTT Exploration &
Production (PTTEP) with 8.5%.
Around 90% of Mozambique LNG’s output has already been sold under long-term contracts, which are largely oil-indexed.
Momentum
Mozambique’s nascent LNG industry is gaining momentum, with the country hopeful that its abundant gas resources and geographi- cal location make it well-placed to supply gas to Asia and beyond. A second planned project, the ExxonMobil-led Rovuma LNG, is progressing towards an FID, which is anticipated by April 2020.
Last month, the project’s developers awarded the engineering, procurement and construction (EPC) contract worth $9.2bn to a consortium comprising Fluor, JGC and TechnipFMC.
Mozambique may be in a position
long-term leading supplier of LNG to China, the world’s
economy
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w w w . N E W S B A S E . c o m Week 45 14•November•2019