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AfrElec COMMENTARY AfrElec
ENH also has a stake in Rovuma LNG, but according to Mitha the cost of its share is still being discussed, as project expenses have risen.
Rovuma LNG will use production from Area 4 as feedstock. Gas from Area 4 will also be used to supply a third plant, Eni’s Coral South floating LNG (FLNG) project, which is currently under construction and scheduled to enter service in 2022.
“Combined, these investments are expected to position Mozambique as the world’s fourth largest producer of LNG, supplying a quarter of the world’s LNG needs and adding $15-18bn to the country’s GDP each year,” said Mitha. He identified China as a prime market for Mozam- bique’s LNG exports, with the Asian country’s demand rising as it seeks to combat air pollution.
“If we get it right, Mozambique is in a position to become a long-term leading supplier of LNG to the world’s second largest economy,” Mitha said.
Indeed, his comments come as the trade war between the US and China continues to restrict LNG trade severely between the two. However, US Secretary of Commerce Wilbur Ross said this week that LNG could form part of an interim trade deal between the two countries that is
currently being negotiated. If these negotiations are successful, Mozambique’s LNG exporters will face increased competition from US suppli- ers of the fuel.
Mozambique has other target markets in its sights, though, with Mitha noting that these include Japan and South Korea.
As it steps up its efforts to market Mozam- bican LNG, ENH has partnered with commod- ity trader Vitol to launch ENH Energy Trading. The joint venture will initially be owned 51% by ENH and 49% by Vitol, but the Mozambican company is expected to increase its stake over time.
The formation of the company, which will be based in Singapore – illustrating Mozam- bique’s focus on Asian markets – is aimed at ena- bling ENH to develop expertise in commodity trading.+
“Our marketing collaboration with Vitol is based upon ‘build, operate and transfer’ prin- ciples, aimed at eventually equipping ENH to manage ENH Energy Trading on a stand-alone basis,” said Mitha.
The start-up of LNG exports from the coun- try is still over two years away, but the pieces appear to be falling into place. ™
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