Exxon Eyes Staggered, But Larger, Rovuma LNG Scheme

Exxon Mobil has reconfigured the scope of its deferred Rovuma LNG project in Mozambique in favor of multiple phased smaller trains, yet with an eye toward a potentially larger final capacity.

Exxon's Mozambican subsidiary launched a tender earlier this month for front-end engineering and design work and potential engineering, procurement, construction (EPC) and commissioning services for multiple liquefaction trains, each with a capacity of 1.5 million tons per year. The tender stated that the work constitutes the midstream portion of Phase 1 of Rovuma LNG, without specifying what subsequent phases might entail. Bids are due by Mar. 31.

The configuration is a marked change from Exxon and its partners' initial concept, which envisioned two large trains capable of producing a combined 15.2 million tons/yr of LNG. Now, the consortium sees a more modular approach building toward an eventual capacity of up to 18 million tons/yr.

Exxon operates the project with a 25% stake, alongside Eni (25%), China National Petroleum Corp. (20%), Mozambican state ENH (10%), Korea Gas (10%) and Portugal’s Galp (10%).

Get Small to Get Large

The shift in design is also a sign of the times.

LNG developers are increasingly eyeing smaller train, modular plants as a way to bring incremental liquefaction capacity on line sooner than is possible constructing megatrain facilities, and as a means to control costs and manage supply chains amid persistent inflation. Multiphase developments also help mitigate some stranded asset risk for developers, as suppliers can gauge over time whether additional trains are in fact needed.

Exxon's adoption of this approach comes roughly four years after it initially delayed making a final investment decision (FID) on Rovuma, before eventually deciding to perform a more thorough cost review of the $23 billion-plus scheme.

Exxon LNG head Peter Clarke told Energy Intelligence in an interview last year that his company was reviewing everything from the size of the trains at Rovuma to modularization to wider technical aspects to have the “most competitive development concept” on hand when the country's insurgent-led threats subside and work on the ground can return.

A violent insurgency in the northeastern region of Cabo Delgado has stifled LNG activity onshore Mozambique for the better part of two years. In fact, integrated peer TotalEnergies was forced to declare force majeure on its $20 billion, 13.12 million ton/yr Mozambique LNG development in 2021. Work there is due to restart in July, although first LNG will be delayed by at least three years, to 2027 at the earliest.

Back to the Drawing Board

It is not clear whether Maputo has sanctioned the revised concept, as the Mozambican government had agreed to the original two-train blueprint in October 2019. But industry sources say it is highly unlikely the consortium would have issued the tender without the government's say-so.

The tender also implies that the original EPC contract that Rovuma LNG awarded in 2019 to a joint venture between Japan’s JCC, Fluor and TechnipFMC is no longer valid. Included in the parameters of that contract was the construction of an airstrip and access roads in the Afungi peninsula.

Rovuma LNG is one of three integrated gas and LNG projects approved by the Mozambican government, all of which are underpinned by the huge deepwater gas reserves in the Rovuma basin.

Beyond Rovuma and Total's Mozambique LNG schemes lies the $7 billion, 3.4 million ton/yr Coral South floating LNG (FLNG) project, which came into operation in November. Like Rovuma, Coral South is also fed by the offshore Area 4 concession.

Notably, fast-moving modular concepts are at work at Coral South, with Area 4 concessionaires plotting a second FLNG train with a similar capacity as the existing unit, but at a cheaper cost and quicker timeline.