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Eni and Anadarko in expectation for Mozambique LNG projects

New Mozambique President to guide projects decisions

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe Italian major company Eni Spa (Eni) and the Houston-based independent company Anadarko Petroleum Corporation (Anadarko) are now expecting from the Presidential elections to speed up the publication of the regulation to guide their final investment decisions (FID) on their respective Mozambique liquefied natural gas (LNG) projects.

Since the first discoveries in the Rovuma Basin, offshore Mozambique, on the Africa East Coast, the operating companies Eni and Anadarko managed with their respective partners to expand the exploration to evaluate the gas reserves and complete the feasibility studies for projects development.

Anadarko_Mozambique_LNG_area-1_Properidade_FPU_MapAlthough the exploration is far from completed the gas reserves are currently estimated around 120 trillion cubic feet (tcf), positioning Mozambique as a potential challenger for Qatar, the world leading LNG exporter and the emerging Australia.

But the development of these fields may require more $100 billion capital expenditure on the next decade to come to effective production and export.

In front of such amount of investments the companies need a clear and stable taxation and legal environment that could not be reached in a context of Presidential elections causing delay to the projects expected to run in commercial production by 2018.

So far these delays have not affected too much Eni and Anadarko Mozambique LNG projects as they were still working on the conceptual aspects but after the election of Filipe Nyusi as new Mozambique President in October the regulations are expected to be voted by the Parliament soon.

Eni and Anadarko ready for Mozambique LNG first train 

To develop their respective blocks Eni and Anadarko opted for different strategies even though the Mozambique Government asked them to align as much as possible to reduce environmental and costs impact on the infrastructures.

Eni_Saipem-Chiyoda_Mozambique_FLNGAnadarko will go for a conventional design with offshore gas production feeding onshore LNG trains, while Eni will combined this scheme with floating liquefied natural gas (FLNG) vessel to export LNG production directly from the field.

Anadarko and Eni have agreed with Mozambique Authorities to centralize their onshore LNG facilities in the Afungi LNG Industrial Park where up to ten LNG trains of 5 million tonnes per year (t/y) each could be installed.

In the meantime the regulations and taxation get clarified by Mozambique Authorities, the other challenge for both companies is to secure commercial agreement for selling gas to customers.

But finding gas customers without clear conditions yet, is not an easy task for the companies which need to support financing such $multi-billion project. 

In August 2014 Anadarko had to sell 10% shares to the India national oil company Oil and Natural Gas Corporation (ONGC) for $2.65 billion.

Anadarko still remains the operator of the Area 1 field development with 26.5% stake of the project.

Since Anadarko managed to sign a supply agreement with Asia customers for the two-third of its Afungi LNG first LNG train, it makes a significant progress in its project as long as Mozambique new government manages to publish its oil and gas regulation and taxation bill this quarter to allow a first production in 2018 at the earliest.

For more information about oil and gas and petrochemical projects go to Project Smart Explorer

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