Eni's Coral South LNG On Track for 2022 Start-Up

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Eni still expects to deliver first LNG from the Coral South project in Mozambique next year, despite violence in the Cabo Delgado region that forced TotalEnergies to put its Mozambique LNG project on hold in April (LNGI Apr.26'21). A source close to Eni says the timeline for the project has not been extended by the turmoil in the region, which is estimated to have caused over 2,600 deaths over the last five years. But the unrest in Cabo Delgado has dented the country's hopes of becoming a major LNG exporter, with the government blaming "terrorists" affiliated to Islamic State. The Italian major operates Coral South and holds a 25% interest in the project which will have a capacity of 3.4 million tons per year. All of the LNG will be sold to BP under a long-term offtake contract. The other stakeholders in Coral South are Exxon Mobil (25%), China National Petroleum Corp. (20%), Kogas (10%), Galp (10%) and Mozambique's national oil company ENH (10%). Mozambique LNG is a much bigger project, which involves building a 13 million ton/yr onshore LNG plant in the Afungi Peninsula fed with gas from offshore Area 1. It has been delayed by at least a year because of security concerns. So far, the government has refused to allow foreign countries to join the counter-insurgency effort, and it has relied instead on private security companies that face allegations of human rights abuses. Less Vulnerable Coral South is much less vulnerable to the unrest than Mozambique LNG because all of its LNG will come from a floating liquefaction vessel that is being built in South Korea and is due to arrive in Mozambican waters at the end of this year. It will be fed with gas from six wells in Area 4 of the prolific offshore Rovuma Basin, which has estimated recoverable gas reserves of around 85 trillion cubic feet. Area 4 would also provide all of the gas for the Rovuma LNG project, which has the same ownership structure as Coral South. Eni is slated to handle the upstream portion, with Exxon overseeing the construction of an onshore liquefaction plant with a capacity of 15 million tons/yr (LNGI Mar.31'21). A final investment decision on Rovuma LNG had originally been expected last year, but it has been put on hold as doubts grow that the project will ever get off the ground, even though the partners have spent $150 million on it so far. In addition to the security worries, analysts say it will be difficult to secure financing as banks come under increasing pressure to back away from fossil fuel projects. Paul Sampson, London

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