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GLNG COMMENTARY GLNG

Mozambique’s LNG plans: Is the

outlook optimistic or pessimistic?

Although Eni’s CEO has remained enthusiastic about multi-billion-dollar LNG projects,

the country’s economic and security challenges warrant attention

PERFORMANCE MOZAMBIQUE’S plans for turning offshore been unable to prevent the militia, which aims
natural gas resources into an engine for eco- to wrest control of the Cabo Delgado province
WHAT: nomic growth and development have suffered at from the government, from committing atroc-
Mozambique’s gas sector least two major setbacks this year. ities such as the beheading of more than 50
has suffered multiple On the one hand, ExxonMobil decided in people in the village of Aldeia da Paz earlier this
setbacks this year. March to postpone a final investment deci- week.
sion (FID) on the Rovuma LNG project. The These setbacks were all the more disappoint-
WHY: US-based giant had been slated to take this ing for occurring as Total was successfully
The country’s offshore step before the end of 2020, but Mozambique’s arranging a major financing agreement for
gas fields continue National Petroleum Institute (INP) revealed Mozambique LNG. The French firm signed a
to have significant in June that the deadline for the FID had been credit deal worth $14.9bn with a group of 20
potential, but pandemic- pushed back to 2021. The delay stems from the banks and export credit agencies in July, and it
related issues, the coronavirus (COVID-19) pandemic, which intends to use the proceeds of the loan to cover
failure of domestic has had such a negative impact on expectations most of the costs of its $20bn project.
gas consumption of world energy demand that it has led many
programmes and civil companies – including but hardly limited to Eni’s optimism
unrest could thwart this. super-majors such as ExxonMobil – to recon- At the same time, other international oil com-
sider greenfield investment projects. panies (IOCs) have remained very optimistic
WHAT NEXT: On the other hand, the Mozambique LNG about Mozambique. For instance, Claudio Des-
The Islamist insurgency consortium, led by France’s Total, lost access to calzi, the CEO of Italy’s Eni, indicated during the
in Cabo Delgado is likely the port Mocímboa da Praia, which has been Energy Intelligence Forum in mid-October that
to pose the greatest serving as the main entry point for shipments of he still saw the Coral South LNG and Rovuma
short-term threat to gas equipment and goods for the project. The port LNG projects as good opportunities. (Eni is lead-
development. facilities were seized in August by Ahlu Sun- ing the Coral South LNG scheme and is working
nah Wa-Jamo (ASWJ), an Islamist group that with ExxonMobil on Rovuma LNG.)
has links to the Islamic State (Daesh). Thus far, During a virtual discussion at the conference,
Mozambique’s armed forces have not been able Descalzi noted that Mozambique’s offshore
to make much headway against ASWJ, which is fields held enough gas to support long-term
also known as Ansar al-Sunna. As a result, it has development. He also described the economics

Week 45 13•November•2020 www. NEWSBASE .com P11