Mining & Energy
Mozambique moves forward in natural gas exploration
File photo / ENH chairman Omar Mithá
The logistical base for Mozambique’s oil and gas industry in the northern city of Pemba is delayed, but far from abandoned, the chairperson of the National Hydrocarbon Company (ENH), Omar Mitha, assured reporters on Friday.
He categorically denied rumours that the operators of the natural gas fields in the Rovuma Basin, off the coast of Cabo Delgado province, the Italian energy company ENI, and the Texas-based Anadarko, were not interested in the base.
The Pemba Logistical Base was inaugurated by the then President, Armando Guebuza, who laid the first stone in August 2014, amid considerable fanfare. The government granted the company Ports of Cabo Delgado (PCD) a 30 year lease on the base.
PCD is owned 50 per cent by ENH and 50 per cent by the port and rail company CFM. PCD then subleased the Pemba base to ENH Integrated Logistics Services (ENHILS), which is a partnership between ENH Logistics (a 100 per cent owned subsidiary of ENH) and the Nigerian company Orlean Invest.
Mitha said that some work has been done at the base, such as fencing it, building access routes. installing a coffer dam, and resettling most of the families that had to be moved. But everything else has been delayed because the timetable for processing and exporting Rovuma Basin gas has slipped.
Back in 2014, there was optimism that liquefied natural gas (LNG) would be available for export in 2018 or 2019. Now 2022 is mentioned as the most likely date for the start of LNG exports. The two consortia headed by ENI (for Rovuma Basin offshore Area Four) and Anadarko (Area One) have yet to announce their Final Investment Decisions.
Those final investment decisions, Mitha said, were crucial for pushing ahead with the Pemba base, “otherwise we would be in danger of building a white elephant”. Furthermore, if the base had been built, it would currently be mostly idle, but with wages and other fixed costs needing to be paid.
Mitha denied claims that there was any kind of ban on Orlean Invest working with United States companies such as Anadarko. In its operations in Nigeria, Orlean Invest had US clients including Chevron and Exxonmobil “which wouldn’t be the case if Orlean Invest was on a blacklist”.
He pledged that the Logistical Base would not abuse its quasi-monopoly position, and there was “no intention of making the base expensive or non-viable”.
Mitha said that the Final Investment Decision for Area Four is likely by the end of this month. Only one of the partners, the Chinese company CNPC has yet to commit itself to the investment.
ENI controls a 50 per cent indirect interest in Area Four, owned through ENI-East Africa, which holds 70 per cent of the concession. The remaining 20 per cent held via ENI-East Africa belongs to the CNPC. The other three partners, with ten per cent each, are Galp Energia of Portugal, Kogas, and Mozambique’s National Hydrocarbon Company (ENH).
But this ownership structure is about to change, since ENI announced on Thursday that it has signed an agreement with ExxonMobil under which the latter will buy a 25 per cent stake in Area Four for 2.8 billion US dollars.
The first phase of exploiting the Area Four gas will be a floating LNG unit (FLN) positioned above the Coral South gas field, which will cost about eight billion dollars, in addition to the 2.8 billion already invested. An agreement has been reached under which all the gas from the floating unit will be sold to the British company BP.
The floating LNG unit, Mitha said, with be the largest investment ever in Mozambique, amounting to about ten times more than was invested in the Mozal aluminium smelter just outside Maputo.
ExxonMobil, however, will not be involved in the floating unit. Its expertise is earmarked for what is known as “Mamba onshore” – taking gas from a second Area Four field, the Mamba field, and processing it onshore. Whereas all production from the floating unit will be exported, some of the Mamba gas can be used domestically.
The quantity of LNG that will be produced at the floating plant will be relatively small, said Mitha, which is why it is more advanced than the plans for Mamba Onshore, or the Area One production which will also be onshore.
The FLNG, Mitha said, “will put Mozambique on the map, show that Mozambique is serious and can handle complex projects”.
As for the onshore processing, Mitha said that in December the government had reached agreement with Anadarko and ENI on building the jetty and maritime offloading facility on the coast of Palma district. He expected work to start soon on the “Resettlement Town” where families will be moved from those parts of the Afungi Peninsula, where the LNG factories (known as “trains”) are to be built.
Resettlement is expected to cost 350 million dollars, and follows a long series of consultations with the local villagers, and the provincial and district authorities. He guaranteed that seeds and other agricultural inputs will be provided for resettled families, and fishing inputs for the many residents of the peninsula who make their living from the sea.
Fishing would be impossible in the area covered by the jetty and offloading facility – but there was plenty of space further south on the peninsula, or near Palma town, where the fishermen could work. Mitha said.Source: AIM
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