All eyes on Mozambique

INVESTORS are flocking to Mozambique’s offshore gas fields and Royal Dutch Shell and a consortium including Sasol have announced plans to study building gasto-liquids plants there.

Gas-to-liquids or GTL plants require significantly more investment and are likely to hold more economic benefits for Mozambique’s economy than converting its rich gas deposits to liquefied natural gas for export. GTL plants use natural gas as a feedstock to produce fuel such as diesel.

Sasol’s partners in the venture are Mozambique’s state-owned oil company, ENH, and Italian multinational Eni, which operates an offshore block in the Rovuma basin. The block is estimated to hold up to 85 trillion cubic feet of gas. PetroSA’s GTL plant in Mossel Bay, with a capacity of 36 000 barrels a day, would consume an estimated 1 trillion cubic feet in 20 years of operation.

Sasol said the findings of the pre-feasibility study would determine details such as the size, cost and possible timelines of the project. Previously, it said that it could take up to six years from pre-feasibility stage to production and an investment of at least $1-billion (about R11billion) for every 10 000 barrels a day of capacity.

A 2012 study estimated that the first production from the Rovuma basin in the north may start by 2018. Development of the country’s gas reserves is likely to require $50-billion.

Shell, which canned plans to build a $20-billion GTL plant in the US in December, saying it would cost a lot more than initially thought, also signed an agreement with ENH to study the prospects for a GTL plant in Mozambique.

Although GTL technology has been around for nearly a century, fewer than 10 GTL plants are in operation around the globe and most have been characterised by cost overruns and production delays. Sasol and Chevron’s GTL plant in Nigeria is still in the commissioning phase, despite initial estimates that it would be in production by 2005. —