Page 5 - AfrOil Week 45

AfrOil COMMENTARY AfrOil

Eni’s optimism Maputo for the last five years in the hope of strik-
At the same time, other international oil com- ing a deal, they noted. Yara initially had high
panies (IOCs) have remained very optimistic hopes for the project, especially since Mozam-
about Mozambique. For instance, Claudio Des- bique also has reserves of phosphate, which is
calzi, the CEO of Italy’s Eni, indicated during the needed to produce NPK-type fertiliser. But the
Energy Intelligence Forum in mid-October that parties have never been able to agree on a price
he still saw the Coral South LNG and Rovuma for the gas, and as a result the Norwegian com-
LNG projects as good opportunities. (Eni is pany has abandoned its plans.
leading the Coral South LNG scheme and is Meanwhile, Yara is not the only company to
working with ExxonMobil on Rovuma LNG.) suffer disappointment on this front. Accord-
During a virtual discussion at the conference, ing to Zitamar, neither of the firms that won a
“
Descalzi noted that Mozambique’s offshore contest for the best domestic gas consumption
fields held enough gas to support long-term project in 2016 have made any progress. That is,
development. He also described the economics Royal Dutch Shell (UK/Netherlands) has not Norway’s Yara
of Mozambican gas extraction as favourable. moved ahead with the planned construction
“What we have to say about Mozambique is of a gas-to-liquids (GTL) plant in Palma, while has decided
that the upstream is quite interesting,” he com- Great Lakes Africa Energy (UK) has not built a
mented. “It’s not very expensive. [There’s] a very gas-fired thermal power plant (TPP) in Nacala. not to continue
low break-even [point], as each well in terms of
boepd [barrels of oil equivalent per day] is rang- Short-term priorities lobbying for the
ing between 35,000-40,000 boepd. The produc- Reconciling these two perspectives is not likely right to use the
tion rate is very good, so you don’t need to drill to be easy.
a lot of wells.” Descalzi’s focus on the long term, even in the government’s
The Eni chief further asserted that LNG pro- face of all the problems 2020 has caused for the
duced from Mozambican gas would help sup- global energy industry, shows that enthusiasm share of gas to
port efforts to reduce global emissions. “I think about Mozambique’s potential is not unrea-
that we need Mozambique gas,” he said. “Gas is sonable. At the same time, though, ExxonMo- make fertiliser
still a very important contributor to the energy bil’s decision to delay its FID in the face of a
transition for different reasons. Clearly, gas is pandemic and the failure of multiple domestic
essential if you are looking at emissions.” gas consumption initiatives show that concern
about short-term challenges is also warranted.
Domestic disappointments In all likelihood, Maputo will have to con-
Descalzi’s enthusiasm is understandable, given front at least one of these immediate challenges if
his propensity for focusing on outcomes in the it wants to move ahead with Mozambique LNG,
long run. “Clearly, for such a big investment, we the project that has made the most headway. The
need a long-term view,” he said at the Energy challenge in question is the insurgency in Cabo
Intelligence Forum. Nevertheless, other foreign Delgado Province. ASWJ’s attacks and seizures
investors have a different perspective, especially of territory have already affected the gas sector
with respect to proposals for the use of future by depriving the group of access to Mocímboa
gas production to supply the domestic market. da Praia. Mozambique LNG has indicated that
Earlier this month, Zitamar and other it does not expect this loss to affect plans for
Mozambican news agencies noted that Yara, a launching production in 2024, but that could
Norwegian fertiliser manufacturer, had decided change if the group gains control over larger
not to continue lobbying for the right to use the swathes of territory in Cabo Delgado. As such,
government’s share of gas as feedstock for a new officials in Maputo would do well to think about
plant. The firm has been in discussions with how to respond to this security issue. ™

(Image: Anadarko)

Week 45 11•November•2020 www. NEWSBASE .com P5