Page 4 - GLNG Week 24
P. 4
GLNG AFRICA GLNG
Anadarko approves Mozambique LNG project
INVESTMENT
ANADARKO Petroleum announced on June 18 that it had made a final investment deci- sion (FID) on its Mozambique LNG project. e scheme will involve the rst onshore LNG export facility to be developed in Mozambique, which will also be the largest LNG project to be approved in Africa to date.
Mozambique LNG will initially consist of two liquefaction trains with a total nameplate capacity of 12.88 million tonnes per year (tpy). Partners in the project have said there will be scope to expand the capacity to up to 50 million tpy further down the line. Feed gas for the lique- faction terminal will come from the Gol nho/ Atum field, in the Rovuma Basin’s Offshore Area 1. Anadarko and its joint venture partners estimate that they have discovered roughly 75 trillion cubic feet (2.1 trillion cubic metres) of recoverable natural gas in O shore Area 1 to date.
Anadarko’s partners in the project, aside from Mozambican state energy company ENH, are all Asian companies. e joint venture includes three Indian rms – Oil and Natural Gas Corp. (ONGC), Bharat Petroleum Resources and Oil India Ltd. (OIL) – as well as Japan’s Mitsui & Co. and ailand’s PTT Exploration and Production (PTTEP). But the FID comes as a change of own- ership is looming. Anadarko is in the process of being acquired by the US’ Occidental Petroleum, a er the latter outbid Chevron to take over the company. Once the takeover is nalised, Occi- dental has agreed to sell Anadarko assets outside the US – including its 26.5% participating inter- est and operatorship in Area 1 and the Mozam- bique LNG project – to France’s Total for US$8.8 billion. e deal, which will mark Total’s biggest acquisition since its takeover of Elf almost 20 years ago, will help refocus the French company on operations in Africa, the North Sea, the deep o shore and LNG. e transaction is anticipated to close in 2020, pending completion of Occi- dental’s takeover of Anadarko.
In its statement about reaching FID, Ana- darko said an aggregate 11.1 million tpy of long-term LNG sales had been secured for Mozambique LNG. is represents 86% of the plant’s nameplate capacity. Anadarko said LNG buyers had been lined up in Asia and in Europe.
“As the world increasingly seeks cleaner forms of energy, the Anadarko-led Area 1 Mozambique LNG project is ideally located to meet growing demand, particularly in expanding Asian and European markets,” Anadarko’s chairman and CEO, Al Walker, said in a statement.
“Flexible commercial arrangements, includ- ing an innovative co-purchase agreement with Tokyo Gas and Centrica, have been instrumental in securing the project a roster of high-quality customers in a crowded LNG market,” Wood Mackenzie’s head of LNG consulting, Frank Harris, commented.
It is hoped that the project’s potential to supply both European and Asian buyers will help to balance out the global LNG market.
It is hoped that the project’s potential to sup- ply both European and Asian buyers will help to balance out the global LNG market and position Mozambique LNG to compete with exporters elsewhere. Asia currently accounts for 75% of global LNG demand, while the European mar- ket is more exible.
Anadarko has also noted that that the project is expected to have a “signi cant” domestic gas component for in-country consumption. e company hopes that this will help fuel future economic development.
Mozambique LNG is also at the centre of a new restructuring deal reached by the country’s government with a group of Eurobond holders last month. Under the in-principle agreement, investors will no longer have access to future rev- enue from the project, but the government will be allowed to pay a lower interest rate until a er Mozambique begins to produce gas in 2023. e country has struggled to service its debts in the past, and Maputo hopes that tapping its natural gas resources will help with this. And it does indeed appear that becoming an LNG exporter will be a game-changer for the country – one of the poorest in the world.
“Both Mozambique’s long-term economic outlook and its ability to re-establish credibility with lenders depend entirely on future gas reve- nues,” a vice president at risk adviser Teneo, Anne Fruhauf, was quoted by Bloomberg as saying this week. And at the signing ceremony in Maputo, in which he participated alongside Mozambican President Filipe Nyusi, Anadarko’s Walker said that over time the project was expected to double the country’s GDP.
e FID comes a er concerns emerged ear- lier this year that Mozambique LNG – among other export projects – would not go ahead amid slumping LNG prices. e price drop was caused by a ood of new supply on the global market not being fully met by higher Asian demand as had previously been expected. However, Anadarko and its partners have secured enough buyers to support the project, and the industry is still optimistic about the rise of LNG demand in the longer term.
ExxonMobil is also developing an LNG export plant in Mozambique. e super-major is expected to announce its FID on the 15.2 mil- lion tpy Rovuma LNG project later this year.
P4
w w w . N E W S B A S E . c o m Week 24 20•June•2019
