Mixed fortunes for Mozambique liquefied natural gasprojects as challenges mount

• Date: 01 August 2020
• Published date: 01 August 2020
• DOI: http://doi.org/10.1111/oet.12810

GAS AND POWER

Mixed fortunes for Mozambique liquefied natural

gasprojects as challenges mount

Mozambique has enjoyed some massive offshore gas dis-

coveries over recent years, enough to lead to three major

liquefied natural gas (LNG) export projects totaling over

30 mn t/y. Total's Mozambique LNG has just secured

funding, but the biggest project (Exxon's Rovuma LNG)

has yet to gain final approval, while rock bottom prices,

cuts to capex and a rising Islamist insurgency could chal-

lenge the timeline, profitability, and security of all three.

In late June, total secured $14.9 bn to fund its

Mozambique LNG project, which is about three-quarters

of the total needed. In all, it will be the biggest ever pro-

ject financing in Africa, with the funds secured on the

pre-sale of production volumes. Mozambique LNG

involves the development of 75 tn ft

3

(2100 bn m

3

) of gas

from the Golfinho and Atum gas fields in the Offshore

Area 1 Rovuma basin concession, and the construction of

a two-train liquefaction plant with a capacity of 13.1 mn

mt/y. The project is expected to start up in 2024, and is

located at the Afungi Peninsula in Cabo Delgado,

Mozambique.

Total took over operatorship of Mozambique LNG

in September 2019 as part of its deal with Occidental to

buy assets the US company acquired when it bought

Anadarko Petroleum. Total has a 26.5% stake, along-

sideMitsui,PTTEP,ONGCVidesh,BPRLVentures

Mozambique; as well as 25% held by local players state-

owned ENH Rovuma and Beas Rovuma Energy

Mozambique.

Elsewhere, LNG export plans are not going as

smoothly. Since March's collapse in oil prices, ExxonMobil

has delayed a final investment decision on its major 15.2

mn mt/y $30 bn Rovuma LNG project—despite already

awarding $3.7 bn in contracts to Fluor, JGC Holdings, and

TechnipFMC, covering construction of the production

trains and associated onshore facilities. The Rovuma plant

had been expected to begin operation in 2024 to 2025, but

this is now likely to slip. The giant project is to be funded

directly by the equity partners—ExxonMobil,Eni,CNPC,

Galp, Kogas, and Mozambique's state oil company ENH.

The most advanced LNG project is Eni's smaller, 3.4

mn mt/y floating Coral Sul project, from which first LNG

is expected in 2022. Eni said the project was 60% complete

earlier this year. This included the launch of the hull of a

floating LNG (FLNG) vessel in South Korea in January,

which is under construction at the Samsung Heavy Indus-

tries shipyard in Geoje, and will weigh around 140 000

mt. It is the first purpose-built FLNG for Africa, and the

first to operate in such deep waters (2000 m).

“The Coral Sul FLNG hull launching is an out-

standing milestone which has been possible thanks to

the commitment of Eni, its Area 4 partners, contrac-

tors, and Mozambican authorities,”Eni's vice presi-

dent for West Africa, Adriano Mongini, said recently.

“We share the belief that Coral South is a pioneering

project that will trigger further developments and new

investments,”he said. Fabrication activities are also

wellunderwayfor12gastreatmentandLNGmod-

ules, with all main equipment ready to be put together

and first deck stacking executed.

Coral Sul is located in Area 4, and is operated by a

consortium led by Eni, ExxonMobil, and CNPC. The pro-

ject will be supplied from 450 bn m

3

of gas from the Coral

field offshore Mozambique. Drilling and completion

activities are on-going at the six subsea wells that will

feed the liquefaction unit.

Mozambique also exports pipeline gas from the Sasol-

operated Pande and Temane gas-fields to South Africa.

1|SECURITY THREAT?

An attack on workers connected with the Mozambique

LNG project in late June by Islamic militants presents

additional challenges for the two onshore projects, with

counter measures possibly including private military con-

tractors, which will raise costs and carries public rela-

tions risks. The attack, which killed eight, was on

workers from Fenix Constructions, a third-party contrac-

tor working with Total. It was carried out alongside

another attack on the nearby town of Mocimboa da Praia.

Another three workers are still missing, while three

others escaped, according to Fenix.

The same militants had also seized Mocimboa da

Praia in March, before security forces pushed them out.

Before that, the closest the militants had managed to get

to the LNG sites was in February 2019 when workers for

DOI: 10.1111/oet.12810

Oil and Energy Trends. 2020;45:7–8. wileyonlinelibrary.com/journal/oet © 2020 John Wiley & Sons Ltd 7