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EPC work on Mozambique LNG dished up
MozaMBiquE
Saipem, McDermott International and Chi- yoda have won the engineering, procurement and construction (EPC) contract for work on the Anadarko Petroleum-led Mozambique LNG project. Saipem said its share of the work was val- ued at US$6 billion, in a statement on June 5. e Italian services company will act as the leader of the CCS joint venture. McDermott said its share of work was US$2 billion. Chiyoda is to provide advisory services to the project only.
The onshore LNG plant will include two trains, with a total capacity of 12.88 million tpy. e EPC work will also involve all required infra- structure, which covers storage tanks and jetties. e rst LNG cargoes are expected in 2024.
e contract is subject to a full notice to pro- ceed from Anadarko, which will come a er the nal investment decision (FID). e US com- pany has been widely reported as having said it would reach FID on June 18.
“A er many years of dedication to this pro- ject, we are very happy to announce that we have reached full agreement for the contract,” said Saipem’s CEO, Stefano Cai. “We look forward to mobilising our teams to site a er Anadarko issues notice to proceed following the [FID]. With this project, we will strengthen our pres- ence in East Africa, con rming Saipem’s role among the leaders in the LNG market for the energy transition. A project of such a scale will contribute signi cantly to the economic growth of Mozambique as a new pole in the west-east energy routes and, as Saipem, we are proud of our substantial contribution to these future developments.”
Anadarko is the operator of Area 1 and the associated LNG plan. Mozambique LNG will be located in the onshore Afungi LNG Park, which will also be the home of the Rovuma LNG plant,
a plan backed by ExxonMobil and Eni, from Area 4. ere is also a oating LNG (FLNG) plan, Coral South, on Area 4, which is expected to begin producing in 2022-23.
Work on the project should involve around 6,000 direct jobs for Mozambique workers at peak.
The International Monetary Fund (IMF) has put the total cost of Mozambique LNG at around US$25 billion, of which US$15 billion would come from debt. In line with this projec- tion, Reuters reported in May that Anadarko was seeking US$14-15 billion for the project.
Anadarko is in the process of being acquired by Occidental Petroleum. Oxy has, in turn, struck a deal with Total, passing Anadarko’s Afri- can portfolio to the French company for US$8.8 billion. is should close in 2020.
debt
Complicating the question of financing for the LNG projects, Mozambique has strug- gled to make payments on its debts. Last week, Mozambique’s Constitutional Court declared the state guarantee provided for Ematum was unconstitutional.
Ematum, the Mozambique tuna company, secured a loan of US$850 million in 2013 from Credit Suisse and VTB Bank, ostensibly to invest in shing boats. By late 2017, Ematum had not carried out any shing and defaulted on its debt. e US has charged a number of individuals – from the Mozambique government and bankers – with violating the Foreign Corrupt Practices Act (FCPA) and money laundering.
e Mozambique government has attempted to resolve its nancial issues by striking deals with bondholders. In November 2018, it agreed a restructuring deal on the Ematum debt,
which included pro- viding a share of rev- enues from the LNG projects. On May 31, it was announced that this provision had been removed from the agreement.
The Constitutional Court ruled, on June 4, that the state guar- antee of the debt did not comply with the budget law. Bondhold- ers have objected on the grounds that the earlier 2013 debt had been swapped for subsequent 2016 Eurobonds. Legal challenges are likely to continue. ™
The Mozambique LNG plan.
Source: Anadarko Petroleum
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