Page 5 - AfrOil Week 40 2019

AfrOil COMMENTARY AfrOil
 This deadline appears to have been pushed back, however. Clarke said in Maputo on October 8 that MRV was looking to make the FID in 2020 and then begin production in 2025.
Political implications
This change of schedule is probably unwelcome news for Mozambique’s government – and for its President Filipe Nyusi, who has been an enthu- siastic supporter of investment in gas projects. Indeed, Nyusi’s administration appears to have encouraged rumours that MRV intended to make the FID on Rovuma LNG on October.
Nevertheless, it is not likely to hurt Nyusi’s prospects for re-election – despite reports that the president had been pushing ExxonMobil and its partners to take this step earlier. Rather, the announcement of the initial investment deal and the EPC contract this week will probably improve the president’s standing ahead of the vote, which is due to take place on October 15. It may not do the same for the ruling Frelimo party, which many observers expect to lose at least a few seats in parliament, but it should give Nyusi a boost.
If nothing else, it will remind voters that the president has played an instrumental role in pro- moting investment in Mozambique’s gas sector. For Nyusi has not just backed the Rovuma LNG project; he also encouraged the US company
Anadarko to commit to the Mozambique LNG scheme and courted Italy’s Eni as it mulled the Coral South LNG initiative.
Potential for transformation
Together, these three projects have the potential to transform Mozambique.
Certainly, they will change the amount of money flowing into and out of the country. The African state’s GDP currently stands at about $12.33bn per year, which is less than a quarter of what the Rovuma LNG, Mozambique LNG and Coral South LNG consortia are proposing to spend.
As noted above, Rovuma LNG will prob- ably carry a price tag of around $30bn, while Mozambique LNG will cost $20bn and Coral South will cost $10bn.
The projects will also establish Mozambique as a major player in the world gas market. The Rovuma LNG, Coral South LNG and Mozam- bique LNG plants will eventually be able to turn out 31.38mn tn/yr of LNG, equivalent to about 10% of current global production capacity.
Reaching this level will take a few years, how- ever. As noted above, Rovuma LNG does not expect to begin production until 2025. Mozam- bique LNG, meanwhile, is due to bring its first train on stream in 2024, and Coral South LNG will launch production in 2022.. ™
“ has been an
INVESTMENT
Chinese companies reportedly keen to expand operations in South Sudan
President Nyusi
enthusiastic
supporter of investment in gas projects
SOUTH SUDAN
CHINA is reportedly interested in expanding investments in South Sudan’s oil sector. Accord- ing to Mayen Wol, the under-secretary of the South Sudanese Petroleum Ministry, represent- atives of both countries gathered in Juba last week to discuss the matter.
In remarks broadcast by South Sudan Broad- casting Corp. (SSBC), Wol said that Petroleum Minister Awow Daniel Chuang had met with Hua Ning, China’s ambassador to Juba, to dis- cuss co-operation on oil projects. He reported that Hua had informed Chuang that Chinese oil companies were looking for ways to expand their operations in South Sudan.
The under-secretary did not say whether Chinese investors were eyeing any specific new projects. He stressed, though, that Juba was eager to work with Beijing on this front.
“We are going to be friendly to the Chi- nese companies so that they can extract the oil because this oil is beneficial to all of us,” he remarked.
State-owned Chinese companies have been active in the area now known as South Sudan for more than two decades. The first to venture into the country was China National Petroleum
Corp. (CNPC), which became the leader of a consortium known as Greater Nile Petroleum Operating Corp. (GNPOC) in the mid-1990s. Sinopec later teamed up with CNPC to set up another consortium, Dar Petroleum Operating Co. (DPOC).
When GNPOC and DPOC began operating, their fields were still under the control of Suda- nese authorities in Khartoum. South Sudan’s split from Sudan in 2011 did not lead CNPC and other Chinese investors to abandon these assets. Instead, the Chinese firms worked to establish ties with the new administration in Juba and with South Sudan’s national oil company (NOC) Nilepet.
They also sought to maintain those relations and protect their assets in South Sudan despite the outbreak of civil war in 2013.
This strategy has been effective, insofar as the CNPC-led consortia now account for 100% of South Sudan’s oil production and are moving forward with exploration campaigns. Chuang noted earlier this year that the country was extracting about 185,000 barrels per day of crude and hoped to push output up to 200,000 bpd in 2020. ™
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