BUSI­NESS Mozam­bique set to cash in on mas­sive liq­ue­fied nat­u­ral gas project

Weekend Argus (Saturday Edition) - - FRONT PAGE - PAUL FAUVET

MAPUTO: Mozam­bique is now “un­doubt­edly on the nat­u­ral gas trade route”, de­clared Pres­i­dent Filipe Nyusi on Thurs­day night, at a cer­e­mony that gave the go-ahead to a multi­bil­lion-dol­lar project to set up a float­ing liq­ue­fied nat­u­ral gas (FLNG) unit off the coast of the north­ern prov­ince of Cabo Del­gado.

The FLNG unit will sit above the Coral South gas field in Area Four of the Rovuma Basin. This is 50km off­shore at a depth of be­tween 1 500 and 2 600m. Dur­ing ex­plo­ration 15 wells were drilled, and the known re­serves in Area Four are over 85 tril­lion cu­bic feet of gas. Coral South is a “struc­tur­ing project” for our econ­omy, Nyusi said, which “will have a great im­pact on our lives”. The sign­ing of the agree­ment on the FLNG project marked an end to the mo­ments of “hes­i­ta­tion, un­cer­tainty and ner­vous­ness” that had pre­ceded it.

Un­der Thurs­day’s agree­ment the Area Four con­sor­tium has five years to com­plete the project. Liq­ue­fied nat­u­ral gas ex­ports should thus be­gin in mid-2022. The FLNG ves­sel will have the ca­pac­ity to pro­duce 3.4m tons of liq­ue­fied gas a year.

All the gas from the FLNG unit will be ex­ported, un­der an agree­ment reached with Bri­tish Petroleum, which may dis­ap­point those who ex­pected at least some of the gas to be sold on the do­mes­tic mar­ket. But the FLNG unit is just the start, and Coral South is only one of sev­eral gas fields dis­cov­ered in the Rovuma Basin. The next step will be to process gas from the Mamba field, also in Area Four, in an on­shore fa­cil­ity to be built on the Afungi Penin­sula in Palma district. The op­er­a­tor of this fa­cil­ity is ex­pected to be the US petroleum gi­ant, ExxonMo­bil.

The fi­nal in­vest­ment de­ci­sion on Coral South, Nyusi added, would mean a change in the in­ter­na­tional per­cep­tion of Mozam­bique, and the rev­enues that would be forth­com­ing would re­duce the deficit on the coun­try’s public ac­counts. The Ital­ian en­ergy com­pany ENI is the op­er­a­tor of Area Four, and its chief ex­ec­u­tive of­fi­cer, Clau­dio Descalzi, de­clared that the project was “very ro­bust”, with 15 banks and other fi­nanc­ing agen­cies com­mit­ted to lend­ing around $6 bil­lion (R77bn) of the $8bn that the project re­quires. These fig­ures do not in­clude the $2.8bn al­ready in­vested in Area Four.

The $6bn was just the start – when other Area Four gas projects came on stream, in­vest­ment could rise to “30, 40, 50 bil­lion dol­lars”, he said.

“We can­not miss this op­por- tu­nity, we can­not fail”, said Descalzi. “The eyes of the world will be on Mozam­bique. We have to achieve.”

The Area Four con­sor­tium is led by ENI-East Africa, with a 70% hold­ing. That stake is di­vided into 20% for the Chi­nese com­pany CNPC, and 50% for ENI it­self, which has signed an agree­ment to sell half of this to ExxonMo­bil. The other part­ners, each with 10%, are Ko­gas of South Korea, Galp En­er­gia of Por­tu­gal, and Mozam­bique’s own National Hy­dro­car­bon Com­pany. The chief ex­ec­u­tives of all these com­pa­nies signed the fi­nal in­vest­ment de­ci­sion on Thurs­day.

Engi­neer­ing con­tracts were also signed, to build the FLNG ves­sel, to drill six off­shore wells, and to link them to the ves­sel by a net­work of ca­bles, known as um­bil­i­cals, ris­ers and flow­lines.

FLNG tech­nol­ogy is rel­a­tively new. To date only one FLNG ves­sel is in pro­duc­tion, in Malaysia, and a sec­ond is be­ing built in Aus­tralia. – In­de­pen­dent For­eign Ser­vice

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