All systems on go for Mozambique LNG

While new oil and gas production in Niger and Cameroon will be welcomed by their respective governments, there is nothing on the west coast of Africa to compare with developments in the continent’s newest province: Eastern Africa. Mozambique in particular is emerging as an energy producer of global importance. Neil Ford reports.

Setting aside earlier discoveries in the south of the country, the official figure for reserves in the Rovuma Basin now stands at 170 trillion cubic feet, which ranks among the 10 biggest national natural gas reserves in the world.

In August, national oil company Empresa Nacional de Hidrocarbonetos (ENH) announced that Anadarko Petroleum Corporation of the US and Eni of Italy were on course to ship the first liquefied natural gas (LNG) from their joint $30bn plant in 2018, in line with the existing timetable.

ENH president Nelson Ocuane said: “Mozambique has good conditions to start exporting in 2018 because all the investment plans indicate that the essential infrastructure will be in place by then.”

However, some industry sources suggest that there could be some slippage and indeed most other LNG schemes developed around the world in recent years have come on stream later than originally anticipated. The timing will depend on how quickly buyers put pen to paper on long-term supply contracts.

Nevertheless, Mozambique is well placed to supply the world’s biggest LNG importers: Japan, South Korea and Taiwan, plus growing importers India and China. At the same time, European LNG imports have not increased as quickly as expected; and the US has failed to emerge as an LNG importer.

The plant will initially comprise four production lines – or trains, as they are known in the industry – each with annual production capacity of 20m tonnes a year. This price tag is almost double Mozambique’s GDP last year of $15.3bn and could rise even further as the cost of developing LNG projects is notoriously difficult to control.

In mid-August, the Mozambique parliament passed new oil and gas sector legislation that gives ENH a bigger role in the industry, replacing the previous law that had been in effect since 2001. The state-owned company will take a stake in all upstream ventures alongside foreign partners.