Mozambique: Report Expects LNG Production to Begin in 2019
Mozambique will begin to produce Liquefied Natural Gas (LNG) in 2019 according to the London-based analysts Business Monitor International (BMI).
A BMI report states that the Italian energy company ENI is expected to be the first to market with its “Mamba” Floating LNG (FLNG) Project. Under the plan, the natural gas will be liquefied aboard a floating vessel before being transferred to tankers to take the LNG directly to buyers.
ENI is the operator in Offshore Area 4 in the Rovuma Basin off the coast of Mozambique’s northern province of Cabo Delgado. The Mamba complex lies across Area 4 and Area 1, where the US company Anadarko is the operator.
ENI has also hired a consortium of KBR and Daewoo Shipbuilding & Marine Engineering Company to develop the front end engineering design (FEED) for its Coral gas field, which lies entirely within Area 4.
The company plans to deliver the first gas from Coral in 2019. However, BMI predicts that this will only begin operating in 2020.
BMI expects a “FLNG production start-up of about six billion cubic metres between 2019 and 2020”. One billion cubic metres of gas is transformed into roughly 0.73 million tonnes of LNG, so BMI is predicting an output of over 4 million tonnes of LNG from the two facilities.
According to BMI, a third floating LNG plant is being considered for the Mamba Complex.
The analysts believe that the 2019-2020 start up target is realistic as there is plenty of shipyard capacity and experience for constructing such moderately sized hull based vessels.
BMI is less optimistic about the planned onshore LNG plant at Afungi, near the northern town of Palma.
It states, “the timing for the onshore LNG terminal however is increasingly uncertain, with falling global oil and LNG prices to cause delays to project final investment decisions. We have pushed back first onshore LNG production by one year, from 2020 to 2021”.
The report continues, “We have on numerous occasions highlighted the uncertainties regarding the timing of first onshore LNG production in Mozambique. While FEED studies for the terminal have been completed, delays in project final investment decisions, the Mozambique election, the absence of supporting infrastructure and regulatory uncertainties will slow the LNG project development “.
It states, “the level of uncertainty has increased over the past two to three months due to falling LNG prices. Price uncertainties could affect the commercial viability of LNG projects worldwide.
This wills likely see companies hold off on final investment decisions as they attempt to redesign projects to cut costs and wait for more certainty on the direction of prices. In the case of Mozambique LNG, we believe that the lower price environment will likely lead to companies seeking to secure more off-take agreements or contracts for its first two trains before reaching final investment decisions”.
According to the report, “currently, industry sources highlight that only 65 percent of LNG has been contracted by letter of intent”.
It concludes, “we therefore now expect Train 1 on the A fungi facility to come online in 2021, as opposed to our previous forecast of 2020, and Train 2 in 2022, from a previous forecast of 2021”.
ENI is the operator of Area 4 with a fifty per cent share. The other partners in the venture are the Chinese company CNPC (with a twenty per cent stake), Kogas, Galp Energia and Mozambique’s National Hydrocarbon Company ENH (each with a ten per cent stake).
Anadarko is the operator in Area 1 with a 26.5 per cent stake. Its co-owners are Mitsui of Japan (20 per cent), ONGC Videsh (16 per cent), Oil India (four per cent), BPRL Ventures (ten per cent) and PTT of Thailand (8.5 per cent). ENH holds a 15 per cent stake in the fields.