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Small Could Be Beautiful in Mozambique

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Just months before the first LNG is due to be shipped from the 3.4 million ton per year Eni-led Coral South project offshore Mozambique, the Italian major and its partners are discussing the possibility of developing a second floating LNG project at Area 4 in the prolific Rovuma Basin.

The global significance of these African FLNG schemes has grown in recent months, as Europe hunts around for viable long-term alternatives to Russian gas.

Asia remains the natural market for Mozambique, however, as it is so much closer.

Offshore Positive View

In a call with analysts at the end of last week, Eni chief executive Claudio Descalzi said there was a “positive view” among the partners — which also include ExxonMobil, China National Petroleum Corp, Portugal’s Galp, Korea’s Kogas and Mozambique state oil company ENH — about the planned second FLNG scheme.

He said it would be “something that is very fast and small size,” with a capacity of 2.5-3 million tons per year, and would involve the same technology that Eni is deploying in the Republic of Congo, where it hopes to start LNG production in 2023 from the Marine X11 block.

Descalzi emphasized the “huge” gas reserves at the Area 4 concession, of around 80 trillion cubic feet, that have made the consortium “really focused” to push ahead with these developments.

In October, the first LNG tanker is due to set sail from Coral South, via an FLNG unit that reached Mozambican waters at the beginning of the year and began receiving gas in June. All the offtake is committed to BP under a 20-year contract. This will be Africa’s largest ever floating LNG project.

Onshore Still Derailed

Mozambique, which hopes to become the world’s next major LNG exporter based on its massive deepwater gas reserves, has seen its ambitions derailed by a violent insurgency in the northeastern region of Cabo Delgado.

The 13.12 million ton per year Mozambique LNG project, operated by TotalEnergies, is still suspended having been shut in April last year, while a final investment decision on the 15.2 million ton per year Rovuma LNG scheme, led by ExxonMobil and also focused on Area 4, remains elusive.

When asked about the prospects of Rovuma LNG, Descalzi said the key issue is whether there are “reasonable” security conditions to execute the project.

The Mozambican government, meanwhile, is optimistic that the security situation is improving and that operations at Mozambique LNG can resume by the end of the year, or early next.

“From our point of view, we expect that this year all the conditions will be created to guarantee and convince the concessionaires to resume activities,” energy minister Carlos Zacarias told journalists at the end of last week.

Topics:
LNG Projects, Floating LNG, Security Risk
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