Page 5 - AfrOil Week 45 2019

AfrOil COMMENTARY AfrOil
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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 Mozam- bique LNG’s first two trains. Sangster’s latest comments illustrate the fact that the project’s developers are now evaluating plans to tap the remainder of the resource.
Sangster said costs for the Mozambique pro- ject were “very competitive”, with good terms.
The other partners in the project are Mitsui with a 20% stake, ONGC Videsh Ltd (OVL), Beas Rovuma Energy Mozambique – a joint venture between OVL and Oil India Ltd (OIL) – and Bharat PetroResources Ltd (BPRL) with a 10% interest each, and Thailand’s PTT Explora- tion & Production (PTTEP) with 8.5%.
Around 90% of Mozambique LNG’s output has already been sold under long-term con- tracts, which are largely oil-indexed.
Momentum
Mozambique’s nascent LNG industry is gain- ing momentum, with the country hopeful that its abundant gas resources and geographical 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.
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 posi- tion 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 coun- tries that is currently being negotiated. If these negotiations are successful, Mozambique’s LNG exporters will face increased competition from US suppliers 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 Mozambique’s focus on Asian markets – is aimed at enabling ENH to develop expertise in commodity trad- ing. “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. ™
EQUATORIAL GUINEA EQUATORIAL Guinea’s Ministry of Mines and Hydrocarbons has given a green light to a project that will support ongoing efforts to pro- mote the development of offshore natural gas
deposits.
Specifically, it has approved a contract signed
with Saipem (Italy) for the construction of a new
gas pipeline. 
PIPELINES & TRANSPORT
Equatorial Guinea approves pipeline deal
“ be in a position
Mozambique may
to become a long-term leading supplier of LNG to China, the world’s second largest economy
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